The fundraising landscape in India is poised to witness unprecedented activity over the next couple of years, with conglomerates, technology firms, and financial services providers actively seeking capital to propel their growth trajectories, alongside owners capitalizing on favorable market conditions to divest their holdings. Debasish Purohit, co-head of investment banking at Bank of America Corp. in India, highlighted this outlook in an interview with Bloomberg News in Mumbai, expressing optimism about the surge in initial public offerings (IPOs) in the coming years.
Purohit emphasized that while 2023 saw a surge in block trades, 2024 is anticipated to be dominated by IPOs, with this momentum likely to extend into 2025. He projected that the years 2024 and 2025 will witness a flurry of IPO activity, setting records for IPO issuance. Anticipating between 5 and 10 tech firms and two or three local subsidiaries of multinational corporations to debut on the market, Purohit underscored the potential for substantial capital inflows into the Indian equity market.
Key players in the Indian corporate landscape, such as Reliance Industries Ltd. and Tata Sons, are gearing up for significant IPOs. Reliance Industries, led by Mukesh Ambani, aims to list its wireless carrier Reliance Jio Infocomm Ltd. and Reliance Retail Ventures after years of planning, while Tata Sons' financial services unit is among several shadow lenders mandated by the Reserve Bank of India to go public by 2025. Additionally, Hyundai Motor Co. is reportedly contemplating the IPO of its Indian business, potentially marking one of the largest IPOs in the country.
India's robust economic growth, coupled with a burgeoning retail investor base and favorable market conditions, sets the stage for an IPO boom. The International Monetary Fund forecasts India's economy to expand by 6.5% in 2024 and 2025, following a 6.7% growth in the previous year. Against the backdrop of China's regulatory uncertainties and market volatility, global investors are increasingly turning their focus towards India, viewing it as a promising investment destination.
Purohit highlighted India's appeal as a standalone market, distinct from the broader Asia Pacific region. He emphasized potential sources of inbound investment from countries like Japan and South Korea, particularly in sectors such as real estate, infrastructure, manufacturing, and financial services. Furthermore, investment in local semiconductor businesses may originate from Taiwan, according to Purohit.
In light of sector consolidation and strategic decisions by company founders, mergers and acquisitions (M&A) activity is expected to intensify in India. Some founders may opt to partner with financial sponsors to drive growth, while others may pursue exits or asset sales based on family considerations or industry dynamics. Purohit emphasized that these trends across M&A transactions could yield significant opportunities for investment banks, providing them with a sizeable share of the fee pool.
