With the NSE and the BSE gearing up for listing, S Ramesh, MD & CEO, Kotak Investment Banking, believes that they provide interesting opportunity to investors globally. Given his interaction with global investors, Ramesh said they are optimistic about India and FY17 is likely to be another robust year for the primary markets. Edited excerpts :

FY16 has been a robustyear for initial public offerings. What is the outlook for FY17?

The pipeline for primary markets looks robust due to two or three reasons. First, the number of private equity investors that made investments in the last three to four years, are looking to monetise part of their holdings through IPOs. Second, I see a number of consumption-oriented stories that have achieved scale. These companies need IPO money to grow and expand further. Third, I expect banking and NBFCs to start raising equity funds.

FY16 has been the first year where we have not seen a single IPO from the real estate or infrastructure sectors but from the broader consumption theme. I expect this broader theme to continue in fiscal 2017.

Not all among the newly-listed companies have done well post-listing…

Post-listing it would be ideal if companies can give 15-20 per cent listing gains. But we must recognise that things are not always in a company’s control. First, the state of the markets or dynamics of the sector in which the company operates can change. Second, there can be unexpected regulatory changes or unforeseen factors which impact the performance of a company post-listing. These can impact the traded market price of the company.

Do you expect the primary markets ever again seeing the bull-run of 2004-2009?

During 2004-2009 there was a large element of real estate, infrastructure and banks. Currently, investors do not have an appetite for investing in real estate and infrastructure for obvious reasons, but I do expect banks and NBFCs to come to the primary markets. I am most bullish on sectors revolving around consumption and healthcare. While I am optimistic about the primary markets in FY2017, I expect the average size of each IPO to be sub-₹1,000 crore.

What is your view on listing of e-commerce firms?

From a listing perspective on main exchanges, I think it is early days because investors have always liked profitable companies. Most e-commerce companies are some time away from profitability. Many of them are struggling to get private money as well.

Having said that, SEBI has come out with the institutional trading platform. Over a two-year period, select e-commerce companies will get listed. We need to give them time. For example, the book building guidelines were issued in 1996-97, but the first such issue came only in 1999. We need to be patient.

What do you think of listing of exchanges?

I am bullish about listing of stock exchanges. It’s a new India theme. Globally, stock exchanges as an investment theme have been loved by investors. Investors will like the IPOs of NSE and BSE whenever they take place.

How do you see the primary markets evolve over the last decade or so?

I have seen the evolution of markets from 1997-98 till today. At one time we had 30 global investors participating in the Indian markets; today we have 1,000+ investors. The ‘Who’s Who’ of global investors are investing in India. They are generally comfortable with the architecture of the Indian markets. The domestic investors — mutual funds and insurance companies — have also evolved as very important participants in the capital markets.

What is the view of global investors on India vs emerging markets currently?

India is a shining star amongst EMs today. Global investors like the India macro story and are constantly looking for internal triggers to invest. Going forward, corporate performance, monsoons and the reforms process will drive the capital markets.

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