Indian Bulls Lag In IPO Race

rupee.jpgThe bulls in India seem to be taking the Indian stock market on a ride. The news of indices crossing every historical mark has been on the lips of every investor. Others who had preferred to stay away from the roller coaster ride are now getting lured to make some quick bucks. The easiest or rather the safest way to get into the share market is through the Initial Public Offerings (IPOs).
There have been a number of successful IPOs in this year and most of them were heavily oversubscribed. Indian bourses saw over $8 billion worth of initial public offers (IPOs) in 2007, but this is just a shade higher than the world’s single-largest IPO by a Russian company, according to the latest data.

Worldwide IPO activity raised a record capital of $255 billion till November 2007, including $8.3 billion on Indian bourses. All the while when we were gazing awestruck at the volume of money being collected by the IPOs in India our counterparts across the globe have been talking of even larger sums of money. India was the fifth-largest market in terms of number of IPOs and the seventh-largest in terms of the proceeds for the year.

There were 95 IPOs in the first 11 months and the total number for the year would be more than 100. Our neighbors in China have got an edge over us in the bourses as well topping with total IPO proceeds of $54.4 billion through 222 issues.

Globally, there were as many as 1,739 IPOs between January and November, while another 91 public issues are estimated to have hit the capital markets during December. The largest IPO of the year came from Russia’s VTB Bank, which alone raised $8 billion.
In India, the largest IPO of the year was by realty giant DLF which rose about Rs 9,187.50 crore (more than $2 billion).

Indian bourses have seemed to become the darling for the Foreign Institutional Investors who are pouring in money. It was the strength of India’s economy, stock market, corporate profits and private equity fuelled IPOs in 2007. In the previous year, the market had seen 78 IPOs raising $7.23 billion.

14 of the top 20 IPOs were from emerging BRIC markets and the surge in Indian IPO activity was a clear reflection of the growth in the Indian economy and the investor’s confidence. Together, the four BRIC countries – Brazil, Russia, India and China – have raised $106.5 billion in 382 deals so far this year compared to $89.6 billion raised in 302 deals in the same period of 2006.Asia-Pacific accounted for 46% of the worldwide IPO league, ahead of Europe, the Middle East, and Africa (EMEA) which together accounted for 35% and North America 14%.

EMEA and Asia-Pacific have the greatest market share of capital raised with 38% and 32% respectively, eclipsing North America (16%) and Central and South America (14%).

Despite accounting for only 4% of the total number of IPOs so far this year, HKSE was the leading exchange by capital raised, attracting a 13% market share, mainly due to having some of the year’s largest listings, including China CITIC Bank and China Railway.

NYSE was ranked second in terms of capital raised (11%), attracting 3.6% of total listings driven by a number of large US deals, including Blackstone Group and MF Global.

Although only 2% of IPOs through November listed on LSE, it attracted 10% of the capital raised, mainly through a few large Russian deals, including VTB Bank and Pik Group.

With funds pouring into Asia and the future prospects of the growing economy are clearly showing signs on the indices. The upcoming year is all set for even bigger and better offerings with a biggest IPOs of all times being planned by the Reliance group.

Namit Agarwal