Fundraising activity in India will be stronger than ever over the next two years as conglomerates, technology firms and financial services providers hunt for capital to fuel growth and owners seize the moment to sell assets, Bank of America Corp’s co-chief investment officer said. banking in the country said.
“2023 was the year of block deals, 2024 will be the year of IPOs — and that momentum will most likely continue into 2025,” Debasish Purohit said in an interview with Bloomberg News in Mumbai. “2024 and 2025 as a block will. be the busiest years of IPOs in our lifetime.”
Purohit expects between 5 and 10 tech firms and two or three local subsidiaries of multinational companies to launch initial public offerings in the period.
Reliance Industries Ltd., controlled by Asia’s richest person Mukesh Ambani, is looking to list its wireless carrier Reliance Jio Infocomm Ltd. and Reliance Retail Ventures for several years, while the financial services unit of Tata Sons, another giant conglomerate, is one of several shadow lenders that the Reserve Bank of India has ordered to list by 2025. Hyundai Motor Co. is also considering listing its Indian business in one of the country’s largest IPOs, Bloomberg reported earlier this month.
India’s stock markets have been on a tear – the benchmark Sensex has risen in each of the past eight years, including a 19% increase in 2023 – and the retail investment base in the world’s most populous country is growing. A robust economy also provides favorable conditions for IPOs and exit opportunities for investors. The International Monetary Fund expects India’s economy to grow 6.5% in 2024 and 2025 after its 6.7% expansion last year.
This comes as neighbor China tries to deal with rumblings in its stock and property markets, along with trade conflicts and various regulatory crackdowns. This further encourages global investors to shift billions of dollars into India.
“Every single private equity fund you talk to wants to have a China plus strategy, so you’ll see at least two, three funds raised for India alone,” said Purohit, who has worked in investment banking for more than two decades.
India should be seen as a stand-alone market rather than an extension or part of the wider Asia-Pacific, according to Purohit. Japan and South Korea are sources for inbound deals in real estate, infrastructure, manufacturing and financial services, while investment in local semiconductors may come from Taiwan, he said.
Some founders of Indian companies will partner with financial sponsors to spur growth, while others will exit or sell assets amid sector consolidation or based on family decisions, according to Purohit.
“These are three or four broad areas that will attract M&A,” he said. “If you’re getting 7% to 8% of the fee, you’re in a good place.”
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Published: 19 Feb 2024, 19:48 IST