A boom in tiny initial public offerings in India may soon be followed by larger deals, broadening options for global investors looking to join the nation’s equities frenzy.

Citigroup Inc., the top arranger of equity offerings in India this year, sees four to five IPOs of at least $1 billion each over the next year. At least ten companies are weighing offerings of more than $100 million, according to data compiled by Bloomberg. 

A flurry of small deals has made India one of Asia’s busiest IPO markets this year. Bigger share sales brighten the nation’s chances of attracting global funds as investors rotate money amid a patchy recovery in China.

A mix of factors is behind the exuberance — stocks are scaling new heights, economic growth is solid and earnings are beating estimates. 

At the start of the year, “we saw a lot of smaller IPOs coming to market, not large ones. What we are seeing is a big shift in this trend with average IPO sizes going up meaningfully,” said Jibi Jacob, the head of equity capital markets for Jefferies in India.

The timing to go public is also influenced by India’s ongoing elections. The poll outcome on June 4 will give a clear picture of political stability and policy continuity, removing any lingering uncertainty for companies.

Potential issuers include e-commerce startup BrainBees Solutions Ltd., which retails baby products under the brand name FirstCry.com, hypermarket operator Vishal Mega Mart, and SoftBank Group Corp.-backed ANI Technologies, which is the operator of ride-hailing app Ola Cabs. Hyundai Motor Co. is also exploring the listing of its India unit that may raise about $2.5 billion.

The performance of recent mid-size debuts is also boosting sentiment. Pharmaceutical company Indegene Ltd., finance firm Aadhar Housing Finance Ltd. and travel distributor TBO Tek Ltd. all popped on their first day of trade this month.

With a 72 per cent surge in IPO proceeds to $3.4 billion so far this year, India has surpassed Hong Kong and South Korea, data compiled by Bloomberg show. 


Mutual funds, which have been seeing more than $2 billion of flows coming through monthly investment plans, have emerged as key investors in IPOs.

“The appetite for bigger IPOs is also supported by the growing size of flows coming to mutual funds because they need paper,” said Sunil Shah, group CEO at Mumbai-based Khambatta Securities Ltd. “If there is no supply of new paper, where do they invest?”

While Indian stocks have beaten emerging market peers on the back of domestic fundamentals, poll jitters in recent weeks stoked volatility. With Prime Minister Narendra Modi widely expected to secure a third term, India bulls are optimistic the outperformance will resume soon. 

“Some large issuers have been waiting on the sidelines for some time. While some were not ready for different reasons, others have been waiting for going to market post elections, expecting big policy announcements to follow,” said Rahul Saraf, Citi’s India head of investment banking. “In addition, there’s deeper liquidity and attractive valuations. All of these pieces are coming together in a way that doesn’t happen very often.”

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