IPOs in India likely to raise nearly Rs 33,264 crore in 2016: EY

Initial Public Offers (IPOs) in India are set to hit a six-year high in 2016 and estimated to raise more than $5 billion (nearly Rs 33,263.75 crore), largely owing to a growing appetite for equities and positive sentiment on the growth front, says an EY report.

In the first quarter of 2016, India was ranked in the top six countries in terms of the number of deals globally and BSE was featured in the top six exchanges in terms of funds raised within Europe, Middle East, India and Africa (EMEIA) region, which amounted to $197 million (nearly Rs 1,310.59 crore) from eight deals.

The deal traction witnessed in the first quarter of this year is likely to continue in the coming months as well, largely due to positive sentiment on growth, government’s plans to divest stake in state-owned enterprises and a robust pipeline built up over the past six years.

“IPOs in India are set to hit a six-year high in 2016 as the companies looking to go public, supported by a growing appetite for equities and an uptick in economic growth, are estimated to raise more than $5 billion (nearly Rs 33,263.75 crore),” EY said.

Meanwhile, global IPO activity slowed significantly in the first quarter of 2016 with a total of 167 deals raising just $12.1 billion (nearly Rs 80,498.28 crore), registering a 39% drop in the number of deals and a 70% decline in total capital raised as compared to the same period last year.

“2016 has already started on a positive note, with six IPOs having raised around the Securities and Exchange Board of India’s (SEBI) approval and we could see successful IPOs from some of these during the year,” said Amit Khandelwal, National Director and Partner, Transaction Advisory Services, EY.

He said the general sentiment for the IPO fund raise to remain positive for the rest of the year and closely track the general economic and investment environment and the Private Equity (PE) exits would continue to be the dominant theme in 2016.

“Divestment are expected to be another contributing factor to IPO market with the government looking to list the profitable public sector units (PSUs), notably the insurance majors. Financial services (microfinance, payments banks), ITeS, life science and automotive are expected to be the more active sectors,” Khandelwal said.

Meanwhile, in 2015, the Indian IPO market saw significant momentum after a gap of nearly four years when 21 firms raised over $2 billion (nearly Rs 13,305.5 crore) from the markets.

The year 2015 saw increased number of private equity backed firms successfully accessing the IPO market driven by the need for the companies to provide the exit to the investors.

“The other key positive aspect was the re-emergence of large issues with the average size of the IPO getting close to $100 million (nearly Rs 665.28 crore), mark with nearly dozen companies raising over $75 million (nearly Rs 498.96 crore),” Khandelwal said.