08 Oct 2016 16:35 IST

IPOs set for a strong comeback

Total value expected to touch $5.8 billion this year, says Baker & McKenzie

India’s initial public offerings (IPO) market is set to make a strong comeback and hit a six-year high in 2016, says international law firm Baker & McKenzie.

Ashok K Lalwani, Principal, Baker & McKenzie, which is among the world’s largest law firms, told BusinessLine: “The total value of IPOs this year is expected to touch $5.83 billion. In the remaining months of this calendar year, IPOs to the tune of $2.90 billion are set to hit the market. (In addition, there are) The already completed 19 IPOs involving $2.93 billion.”

According to Lalwani, the triggers for this increased interest especially among the institutional investors are the upbeat economic sentiment and improved business confidence. Better inflation conditions and improved foreign direct investments also helped. If the number is achieved, it would be significant as the total value of capital raised through IPOs was only $2.18 billion in 2015. The largest IPO activity was last recorded in 2010, when $8.47 billion was raised.

Flurry of IPOs

The flurry of IPO activity could continue in 2017, according to the international law firm that represents issuers, investment banks and selling shareholders in equity and debt transactions.

Some of the top IPOs in the pipeline in 2016-17 include Vodafone India, SBI Life Insurance, PNB Housing Finance, Bombay Stock Exchange, National Stock Exchange, Varun Beverages and Go Airlines.

“There is definitely an uptick in deal activity. This is very much controlled growth. Nothing to suggest of any bubble-like situation,” Lalwani said.

Baker & McKenzie has identified financials, insurance, telecommunications, industrials, consumer products and services and healthcare as the likely busiest sectors in the next 12 months. Lalwani said there was good appetite for Indian paper — both debt and equity — among foreign investors. Foreign investor interest in equities is expected to stay longer than for debt, although there is a hunt for yields, he noted.

Domestic listings continue to dominate India’s IPO scene. Dual listing on both the Bombay Stock Exchange and the National Stock Exchange accounted for 98.8 per cent of Indian companies’ listings by value in 2016 to date.