The Hindu Business Line : LSE betting on realty, infrastructure sectors

AIM, the window provided by London Stock Exchange (LSE) for smaller companies, has identified real estate and infrastructure as two of the more important sectors in India, which could potentially throw up listing candidates.

AIM, on which Indian companies have so far raised over $1 billion, is in talks with a number of local corporates to figure out their fund-raising strategies. Some of these operate in the two high-growth segments.

The market, which currently hosts 10 entities with operations in India, is aware that both real estate and infrastructure have enormous funding requirement. The latter is expected to grow in the days ahead.

Mr Hugh Sandeman, Head of Business Development for India, LSE, felt the significance of the two sectors will increase in the coming days. "It looks like both will become more important," he told reporters, adding that AIM has already attracted a range of companies, representing diverse segments, from India.

The reference is clearly to companies, many of which are not domiciled in the country, that operate in sectors like energy, minerals and hotels. Three real estate entities - Ishaan Real Estate (offer size: $340 million), Eredene Capital ($100 million) and Trinity Capital ($450 million) - and one infrastructure company (Noida Toll Bridge, which raised $50 million) are part of the list as well.

AIM had till recently felt that outfits representing sectors like natural resources and metals would constitute a key part of India's involvement. However, the surmise had to be revised in light of recent developments. Media and auto component companies have also showed interest subsequently, Mr Sandeman observed.

AIM, it is claimed, is becoming a more attractive proposition for smaller, promising companies, thanks to changes that have been brought about. There has been an escalation in liquidity, seen by all as a sign of maturity. In 2005, three companies with business interests in India, raised about $75 million on the exchange. As many as seven came to the exchange in 2006. Some of these are domiciled in the UK, Isle of Man and Cayman Islands.

IPOs for global businesses

AIM is looking at the emergence of what could potentially turn into a big affair for India Inc.: Initial public offers by local players for their foreign businesses.

The LSE platform, given the advantages it can offer, would make a good choice for such companies, Mr Sandeman noted. A section of them may choose not to dilute their parent companies; instead, they make take such a step abroad with respect to their international operations, he added.

The process will involve an IPO of business held outside by an Indian parent. This will allow a promoter to rationalise holding at the subsidiary level, rather than in the parent company. In fact, the equity story of the international business may be considered more attractive to global than domestic investors.

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LSE betting on realty, infrastructure sectors