BHUBANESWAR: Stripping away market volatility driven by global factors and general elections, steady investor confidence and the rise in domestic capital participation in the equity markets is encouraging a healthy IPO pipeline across sectors and markets.
Interestingly, companies will also be closely watching the Securities and Exchange Board of India (SEBI) meeting on June 21 where the board is likely to revamp to IPO norms, making it easy and convenient for bonafide issuers.
Several companies have lined up for IPO plans worth $5 billion in the coming months. While the number of transactions may come down to some extent, the pipeline remains rather healthy with deal sizes expected to get larger. According to a recent Ernst & Young report, inflows of domestic capital may open windows of opportunities for companies to take the IPO route.
“The stock market is seeing a lot more volatility this year and thus the time window for listings will get shorter as compared to last year,” said Vivek Soni, partner and national leader private equity services, EY India. He added that PE-backed IPOs have outperformed non-PE backed IPOs, compared to their offer price across time periods.
As many as 90 initial public offers hit the Indian stock market this year, raising $3.9 billion in the first half of 2018, the report states adding activity “looks good” for 2018 as well.
This was 27 per cent and 28 per cent higher than the corresponding period of last year’s activity in terms of number of issues and proceeds, respectively, as companies tried to take advantage of the liquidity in the markets on the back of a solid 2017.
However, owing to increased volatility in the stock markets activity slowed down a bit in the second half which saw 36 IPOs raise $1.7 billion. While the activity was up by six per cent in terms of number of IPOs, it was down by 29 per cent in terms of proceeds.
The report also states that financial services, infrastructure and consumer-driven companies with strong growth continue to be favourable bets.
Public sector firms that are expected to go for listing this year include six state-owned entities.