Comments
The year 2016 is set to be a record-breaking year for the Indian IPO market, with about 50 companies having raised $2.93 billion till date, and another 22 companies are lined up for the rest of the year.
This will bring the year-end with an estimated total deal value of $5.8 billion, more than double that of last year's total deal value of $2.18 billion from 71 listings. This is also the highest since 2011, a research by Baker & McKenzie said.
Momentum in the India IPO market continues to build, boosted by Prime Minister Narendra Modi's drive to cut bureaucratic red tape to improve the ease of doing business in India.
Rationalisation of tax regime
These efforts include a rationalisation of the country's current tax regime, where goods are often taxed multiple times at different rates, whether they be at the production and investment stage or during interstate trading.
The recently passed Goods & Services Tax Bill, which will take effect on April 1, 2017, will unite India as an efficient common tax market for the first time. This will also have a positive long-term impact on the Indian economy.
"The GST Bill will not only bring about the immediate benefit of widening the country's tax base and improving the revenue productivity of domestic indirect taxes, but more importantly, it sends the message to the people of India and the rest of the world that the Indian government is committed to the country's economic reform, further bolstering India's attractiveness as an investment destination," said Ashok Lalwani, Head of Baker & McKenzie's India Practice.
Domestic listings
Domestic listings continue to dominate India's IPO scene. Dual listing on both BSE and NSE accounted for 98.8 per cent of Indian companies' listings by value in 2016 to date, raising a total of $2.9 billion from 19 IPOs. These include ICICI Prudential Life Insurance's $909-million IPO, which is the country's biggest IPO this year.
About 33 companies are expected to dual list on both the BSE and NSE by the end of 2016, raising $4.62 billion.
Improved business confidence is also driving Indian companies to look at growth and market expansion opportunities overseas by way of cross-border IPOs. This provides a means to access risk capital that is not available in India, and also to connect with investors who better understand and appreciate their businesses.
Cross-border IPO
Among the 22 IPOs in the 2016 pipeline is Strand Life Sciences' listing on NASDAQ, which if it goes ahead, will be India's first cross-border IPO since early 2015 when Videocon d2h listed on NASDAQ, for which Baker & McKenzie provided legal advice.
Materials, industrials and financials have been the busiest sectors by both value and volume over the past five years, and also in 2016 year-to-date by equity deal volume. IPO activity in the financials and telecommunications sectors will likely pick up pace, as a number of additional mega deals come to fruition.
These include Vodafone's $3-billion IPO and PNB Finance Housing Ltd's $388.45-million IPO.
Both the healthcare and consumer products and services sectors also have a healthy deal pipeline with 22 deals expected to debut in 2016-2017. These deals include Aster DM Healthcare's $176-million IPO and Varsity Education Management's $296-million IPO.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.