India's thriving initial public offering market is pushing ahead with bigger debuts, despite this week's global share selloff. This year, 189 companies filed for new share sales, raising $5.6 billion, making it one of the busiest marketplaces in this category. At least 30 Initial Public Offerings (IPOs) are planned as domestic demand drives corporations to consider listing. Despite global equities market volatility, the pipeline demonstrates investor optimism in India. Local investors armed with wealth and a desire to join in the world's fastest-growing major economy are dismissing concerns about global hazards.
"Absorption of supply is not a challenge for India," stated Vaibhav Porwal, Co-founder of Dezerv Investments Pvt. Ltd. in Mumbai. Equity mutual funds have over $13 billion in cash in their portfolios, while recurring investment plans generate over $2 billion in monthly inflows, indicating "big liquidity to support any sort of supply."
While the majority of startups raised less than $100 million this year, larger deals are also coming to market. Ola Electric Mobility Ltd. is set to list for more than $730 million on Friday, while Brainbees Solutions Ltd., a baby-products business, will debut for approximately $500 million on August 13. Hyundai Motor Co. is expected to generate a record sum of up to $3.5 billion from the listing of its Indian affiliate in the coming months.
The Indian market regulator is also considering applications for Hero Fincorp Ltd.'s $440 million offer and Niva Bupa Health Insurance Co.'s around $360 million share sale. Other major offerings could include the IPO of SoftBank-backed food delivery company Swiggy Ltd. While individual investors have played an important role in the success of such sales in India, the offerings have also attracted foreigners. However, volatility in global financial markets may reduce the appeal of the assets.
"If the risk appetite remains as fragile as it has been in recent days, IPO discounts may widen and valuations fall," said Arvind Vashistha, Head of India equities capital markets at Citigroup Inc. Companies are still going strong with roadshows, but "it's also not a day to go out and actively engage with investors around live transactions as they manage their current portfolios." So yet, the global volatility appears to have had little effect on India's IPO market. On Tuesday, Ola Electric's offer was more than four times oversubscribed, with high demand from both retail and institutional investors.
