India had the third highest IPO proceeds in 2020FundraisingviaIPOs is at a13-yearhigh as a flood of foreign money and unprecedented interest from mom-and-pop investors spur more listings, making India one of the hottestIPOmarkets in 2021.Companies have raised $2.2 billion through initial public offerings (IPOs) so far thisyear, the highest amount since 2008, Refinitiv data showed.
That follows $9.2 billion lastyear, the third-biggest behind the United States and China, thanks to a flurry of listings in late 2020.IPO proceeds at 13-year high this yearPhoto Credit: ReutersHeavy foreign investor flows into shares, massive federal spending and strong corporate earnings have drivenIndianmarkets to record highs thisyear, encouraging more firms to tap public markets."If you want to be in Asia, but don't want all your eggs in one basket, the China basket, India is the easiest option to go for.
It's large, liquid, and got a low correlation with China," said Herald van der Linde, head of Asia equity strategy at HSBC.India had the third highest IPO proceeds in 2020Photo Credit: ReutersThe stimulus unleashed by central banks globally in response to the COVID-19 pandemic also has driven flows from foreign investors into many emerging market shares, particularly India, where they have invested $6.1 billion in January-February, the highest among seven major countries in Asia.After surging 31 per centfrom November 2020 through mid-February 2021, India's main NSE Nifty 50 stock index has corrected slightly in March and some analysts have raised concerns over high valuations, but companies filing forIPOs appear unfazed.India leads FII inflows in past few yearsPhoto Credit: Reuters"There is a strong momentum in theIPOmarkets, and we are seeing an increased interest from companies across sectors looking to raise capital in the near term," said Sandip Khetan, a partner at consultancy EY in Gurugram, India.Many technology-basedstartups, backed by marquee global investors, could also go public in the near future, which would only attract more foreign investors, Khetan added.Indian IPOs first day gains this yearPhoto Credit: ReutersRecord levels of participation fromIndianindividual investors, particularly in public listings, has also propped upIPOs.New investors, as measured by so-called "demat" investor accounts, reached a record 51.5 million in January, rising by roughly 1 million every month from the 39.5 million in January 2020, according to data from the Securities and Exchange Board of India.Rising demat accounts in IndiaPhoto Credit: Reuters"What you're seeing is local companies are being bought by local investors.
You could say 'India is buying India'.
That's a healthy trend forIPOs," van der Linde said.