India is hot in global equity capital markets

India is hot in global equity capital markets

On February 9, 2022, a man rode a motorcycle past the Hyundai showroom in Mumbai, India.

SYDNEY – Bankers say a spate of big deals and listings in India, such as Hyundai Motor Co.'s $3 billion IPO, will draw more money into the Indian market, which this year accounted for a quarterly record share of global equity capital markets deals .

The lack of deals elsewhere in Asia will increase incentives for capital to flow into India, they added.

Rising global interest rates, geopolitical tensions and China's economic slowdown and its move to limit initial public offerings (IPOs) to support secondary markets have led to a sharp decline in Asian equity trading volumes.

On the other hand, India has become the second busiest equity capital market (ECM) trading market in the world after the United States.

London Stock Exchange data shows that in the first quarter of 2024, Indian companies raised US$2.3 billion through IPOs, an increase of more than 12 times from US$166.5 million in the same period last year.

Read: Investors pile into Indian stocks as China struggles

The total ECM transaction volume increased by 139%, becoming the most active market in the Asia-Pacific region. Among them, Japan's transaction volume fell by 46.8%, accounting for 10.05% of the total global transaction volume in the first three months, a record high.

“The pipeline and activity levels have never been bigger or busier. We're seeing more multi-billion-dollar deals, which is unbelievable,” said Rahul Saraf, head of investment banking in India at Citigroup express.

“India has really matured in terms of size, scale and quality of issuers.”

Hyundai India launched

The National Stock Exchange, the country's largest exchange, was the third most active listing venue globally in the first quarter, behind the New York Stock Exchange and Nasdaq.

“If you look at global liquidity, in the current environment, where do large family offices or global foundations like to put their money? Most likely between the U.S., India and Japan,” Saraf said.

read: Indian stock market surpasses Hong Kong to become the world's fourth largest stock market

Amid ongoing mega-deals, the listing of South Korean carmaker Hyundai Motor's Indian unit is expected to be the country's largest-ever IPO as it aims to raise up to $3 billion in 2024 in a deal that will The automaker is valued at as much as $30 billion.

Budget supermarket chain Vishal Mega Mart is also planning a $1 billion initial public offering that would value the company at as much as $5 billion.

“In terms of upcoming deals…the deal sizes are getting bigger and more companies will be lining up to list later this year once the elections are over,” said Sumit Singh, research director at Aequitas, writing in Smartkarma Sumeet Singh said.

The Indian general election will last for nearly seven weeks starting from April 19.

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According to LSEG data, Citigroup tops the list in terms of ECM activity in India, ahead of Bank of America and ICICI Bank.

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