Strong IPO momentum expected to continue into 2021: EY report

K.R.Srivats New Delhi | Updated on January 25, 2021

Anticipate more cross-border activity, with Parliament approving direct overseas listing for Indian companies

It could be a stellar 2021 for Initial Public Offerings (IPOs) in India with the strong IPO momentum seen in the last quarter of calendar year 2020 expected to sustain in the current year as well, the latest EY Global IPO Trends report has indicated.

The rush of IPOs in the latter part of 2020 and high investor demand raises the prospects for IPO companies in the pipeline, said the report. “We expect more new economy companies to list in 2021. We also anticipate more cross-border activity with approval from the Indian Parliament for direct overseas listing of Indian incorporated companies,” it added.

In India, the momentum gained in Q3 2020 (July-September) continued into Q4 2020 (October-December) as 19 IPOs were launched on the Indian exchanges, with the proceeds totalling $1.8 billion. However, the 2020 deal numbers declined 33 per cent as compared with 2019, while the proceeds increased 61 per cent.

India recorded 19 IPOs ($1,836.22 million) in the fourth quarter of 2020 with the Indian stock exchanges (BSE and NSE, including SMEs), as against 11 IPOs at this time in the previous year. India ranked ninth globally in terms of the number of IPOs in 2020, with 43 IPOs raising $4,095.99 million, according to the EY India IPO Trends Report: Q4 2020.

In terms of the number of IPOs, India at 43 deals accounted for 3.1 per cent of the global IPO activity in 2020. This was lower than 5.6 per cent with 64 deals in 2019. The Indian stock exchanges (BSE and NSE including SMEs) ranked ninth in the world in terms of the number of IPOs in the full year 2020.

In the main markets (BSE and NSE), there were 10 IPOs in Q4 2020 versus five IPOs in Q4 2019 and four IPOs in Q3 2020, representing an increase of 100 per cent compared to Q4 2019 and an increase of 150 per cent compared to Q3 2020. Real estate, (RE), hospitality and construction and diversified industrial products were the most active sectors (in terms of the number of IPOs) with three IPOs launched in each sector (including main and SME markets).

Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India said, “There is a strong momentum in the IPO markets, and we are seeing increased interest from companies across sectors looking to raise capital in the near term. Additionally, companies are keenly awaiting guidelines for direct listing in the overseas markets. The market sentiment remains positive for what could be a stellar 2021.”

Khetan said exuberance in the market has resulted in several companies, including e-commerce and emerging technologies, preparing to accelerate their IPO plans. In addition, GIFT City (Gujarat International Finance Tec-City), which offers trading in equities, currencies, and commodities, as well as listing of international bonds, might emerge as a key platform for Indian businesses in the global markets.

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Published on January 25, 2021
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