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ipo: India’s IPO market desperately needs some mega deals

by TradingETFs.com
By Zhen Hao Toh and Baiju Kalesh

India may need a savior for its initial public offering market, with proceeds raised since January falling to a five-year low.

The eight companies that have listed in 2020 have raised just $7.3 million, according to data compiled by Bloomberg.

Their deal size has been tiny — $900,000 on average, with Hindprakash Industries Ltd.’s $1.6 million share sale being the largest. Their performance has also been far from stellar as their shares have climbed 1.8 per cent on average, weighed by offer size, compared with a 5 per cent advance in the MSCI India Small Cap Index through the last close.


The coronavirus outbreak has thrown a spanner in IPO works in India, as investors grapple with the market uncertainty that comes with it, said Pranav Haldea, a managing director at Prime Database Group, a capital-market database provider. “Certain issuers have adopted a wait-and-watch approach to see if the budget announcement of Feb. 1 has any major impact on their business.”

On the bright side, a series of billion-dollar initial share sales are in the pipeline. The most high-profile deal is the privatization of state-run behemoth Life Insurance Corp. of India, which could fetch as much as 900 billion rupees ($12.6 billion). Then there’s Tower Infrastructure Trust, which filed for an IPO of as much as $3.5 billion, and SBI Cards and Payment Services Ltd., backed by State Bank of India and Carlyle Group, which is targeting a listing of about $1.3 billion.

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