India Braces for Fundraising Surge with IPO Boom in 2024-2025

Bank of America's Debasish Purohit predicts 2024 and 2025 to be the busiest years for Initial Public Offerings (IPOs) in India's history

February 20, 2024

Between 5 and 10 tech companies, alongside 2-3 local subsidiaries of multinational corporations, are expected to launch IPOs during the period

Reliance Industries and Tata Sons' financial services unit are among the major players gearing up for IPOs, capitalising on the country's bullish equity markets

India's benchmark Sensex on an eight-year rally, showcasing a 19% surge in 2023, with a projected 6.5% economic growth in 2024-2025

Amid China's market challenges, global investors diverting billions into India, driven by the appeal of a "China plus strategy"

Over the next two years, fundraising activities in India are expected to reach unprecedented levels as conglomerates, technology firms, and financial services providers seek capital for expansion while owners capitalise on the opportune moment to divest their holdings, according to Debasish Purohit, co-head of investment banking at Bank of America Corp. in the country.

In an interview, Purohit anticipates a shift from block trades dominating 2023 to the emergence of initial public offerings (IPOs) as the main trend in 2024, with this momentum likely extending into 2025. He projects 2024 and 2025 to be the most active years for IPOs in recent memory, estimating that between 5 and 10 tech firms and two or three local subsidiaries of multinational companies will go public during this period.

Prominent companies, including Reliance Industries Ltd. and Tata Sons’ financial services unit, are poised for IPOs, with Reliance looking to list its wireless carrier, Reliance Jio Infocomm Ltd., and Reliance Retail Ventures. The robust performance of India’s equity markets, exemplified by the eight-year upward trend of the benchmark Sensex, coupled with the expanding retail investor base, creates favorable conditions for IPOs and exit opportunities for investors. The International Monetary Fund predicts a 6.5% growth in India’s economy in 2024 and 2025.

As China grapples with challenges in its stock and property markets, regulatory crackdowns, and trade conflicts, global investors increasingly redirect dollars into India. Purohit notes a growing interest in India from private equity funds adopting a “China plus strategy.”

Purohit highlighted India’s appeal as a standalone market rather than merely an extension of the broader Asia Pacific region. He identifies Japan and South Korea as sources for inbound deals in various sectors, including real estate, infrastructure, manufacturing, and financial services. Meanwhile, Taiwan may play a role in investments in local semiconductor businesses.

Regarding mergers and acquisitions (M&A), Purohit identifies key areas, such as partnerships between founders of Indian companies and financial sponsors to stimulate growth, along with exits or asset sales driven by sector consolidation or family decisions. He underscores the attractiveness of these areas, noting that securing 7% to 8% of the fee pool would position entities favourably in the market.

Source: Business Standard

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