Indian companies dismiss global worries to push ahead with IPO listings

By Ashutosh Joshi and Dave Sebastian
 

India’s bustling initial public offering market is barreling ahead with bigger debuts, shrugging off this week’s global equity selloff.

The nation saw 189 companies going for fresh share sales to raise $5.6 billion this year, making it one of the busiest markets in this space. At least 30 IPOs are in the offing as demand powered by domestic money pushes companies to explore listing.

The pipeline underscores investor exuberance in India despite turbulence in global equity markets. Local investors armed with funds and a desire to participate in the world’s fastest-growing major economy are ignoring pessimism over global risks.

“Absorption of supply is not a challenge for India,” said Vaibhav Porwal, co-founder of Dezerv Investments Pvt. in Mumbai. Equity mutual funds have about $13 billion of cash in their portfolios, while recurring investment plans are bringing over $2 billion of monthly inflows, which is “big liquidity to support any sort of supply.”

While the bulk of companies raised below $100 million this year, bigger offerings are also coming to the market. On tap are Ola Electric Mobility Ltd.’s listing of more than $730 million Friday and baby-products company Brainbees Solutions Ltd.’s debut of about $500 million on Aug. 13. Hyundai Motor Co. will likely raise a record amount of as much as $3.5 billion from the listing of its Indian unit in the coming months.

India’s market regulator is also processing applications of Hero Fincorp Ltd.’s some $440 million offer and Niva Bupa Health Insurance Co.’s roughly $360 million share sale. Other large offerings may include IPO of SoftBank-backed food delivery firm Swiggy Ltd. 

While retail investors have been key for the success of such sales in India, the offerings have attracted foreigners as well. Jitters in global stock markets, however, could potentially dampen the appeal of the assets.  

“You could see IPO discounts widen and valuations lower if the risk appetite remains as fragile as the past few days,” said Arvind Vashistha, head of India equity capital markets at Citigroup Inc. Companies are still powering through with roadshows, though “it’s also not a day to go out and actively engage with investors around live transactions as they manage their current portfolios.”

At least so far, India’s IPO market doesn’t look fazed by the global volatility. On Tuesday, Ola Electric’s offer was subscribed more than four times the shares offered, with strong demand from retail as well as institutional investors.