The primary causes of the surge in initial public offerings (IPO) in India are the expansion of the Indian economy and the rise in corporate profits. Rahul Saraf, Head of Investment Banking at Citi India, which served as an advisor on Hyundai’s IPO, claims that many big MNCs are now eager to go public despite Hyundai Motor India’s dismal stock market debut.
India is currently the fourth-largest economy in the world, and its robust growth, high valuations, and controlled inflation are encouraging confidence among Indian investors. During Citibank’s media roundtable, Saraf stated that the involvement in this IPO boom is evident from all segments of the investor community, including retail investors, FIIs, DIIs, and HNIs.
Except for 2022, he claims that steady market returns of more than 12% since 2019 are also drawing in investors. Outflows from some nations and India’s participation in international bond indices are further significant factors.
He also maintains his confidence despite Hyundai Motor India’s lacklustre performance on the listing day. “I don’t believe Hyundai should be viewed as a one-day performance. Yesterday, the stock increased by 0.5%. Over time, one can determine whether the stock is performing well or not. Additionally, we are optimistic about interest levels since Hyundai has the finest anchor book in a very long time.
The quota for qualified institutional bidders (QIBs) had a subscription of 6.97 times the shares on sale, whereas Hyundai’s initial public offering (IPO) was subscribed 2.37 times. There was little reaction to the section designated for consumers and non-institutional investors.
Speaking about the growing interest in FII in India and Asia in general, Arvind Vashistha, Head of India Equity Capital Markets (ECM), said: “More people are moving into Asia to run the funds.” Aside from that, we have sometimes seen investors from places other than Singapore, London, continental Europe, and the US, but this is a small number, and the trend is not significant at this moment. Additionally, we observe significant IPO-level discussions and interest from the Middle East, Canada, Japan, and Australia. The little IPO allocation that FIIs receive is a major obstacle, he continued, and it isn’t significant enough for them to monitor.
According to Saraf, the pipeline appears to be highly promising for 2025. He hopes that M&A activity will rise. We had about 50,000 transactions this year. Our market share is 15%. In M&A and ECM, we are the best. As a result, we believe we have a solid idea of the anticipated levels of activity. Additionally, our pipeline is stronger now than it was a year ago,” he continues.
