Indian IPO market to pick up pace in coming months: EY

IPO activities in India and certain other markets are expected to gather momentum in the coming months amid strengthening investor sentiment and diminishing political uncertainty, says a report.

Global consultancy EY today said that across Europe, Middle East, India & Africa (EMEIA) markets, initial public offering (IPO) activities picked up pace in the first half of this year and is expected to gather further momentum. According to EY Global IPO trends: Q2 2017, despite geopolitical uncertainties in first half, activities in EMEIA are increasing, making it the second most active IPO market globally. “As elections across the UK and Europe are decided, political uncertainty is diminishing, strengthening investor sentiment. This should lead to a pick-up in IPO activities across EMEIA, led by India and the Nordic markets,” the report said.

Globally the IPO activity, so far this year, recorded 772 IPOs raising USD 83.4 billion. The top three sectors, in terms of highest number of IPOs during April-June 2017, were technology (13 IPOs raising USD 1.5 billion), industrials (12 IPOs for USD 3.2 billion) and health care (11 IPOs for USD 2.3 billion).

Regarding the Indian market, the report said, “IPO activity has been particularly strong and Bombay and National stock exchanges and their SME markets as a whole led EMEIA by deal number”.

Indian exchanges saw 57 IPOs raising USD 2.3 billion in the first half of 2017. The year 2017, kick-started with two landmark IPOs — BSE became the first-ever Indian exchange to be listed, while Housing and Urban Development Corporation (HUDA) was hugely oversubscribed, making it one of the most popular IPOs in more than a decade.

“Increased activity for IPOs does not only suggest better market sentiment but demonstrates positive impact of corporate action towards improving governance in response to government policy and enabling regulations,” said Pankaj Chadha, Partner at a member firm of EY Global.

Moreover, in India, IPO activity for small and medium enterprises in particular continues to grow due to strong valuations and positive returns, with the SME Board on BSE and National stock exchanges being one of the fastest growing stock exchanges globally.

Indian exchanges expect the second half of 2017 to be particularly strong with the government expected to raise close to USD 3 billion by way of former state-owned enterprise (SOE) IPOs, the report added. State-owned enterprise (SOE) privatisations refers to former state-owned entities that have completed their IPO listings to become public companies.