Nomura Holdings believes that India’s initial public offerings will regain momentum in 2022-23 fiscal year (FY 23), as indicated in increased activity in secondary shares sales.
“The capital markets on the secondary side which is on the block and QIPs (qualified institutional placement) have started to pick up,” Amit Thawani, head of India coverage investment banking at Nomura, said in an interview on Tuesday. “We expect a constructive environment, especially in the second half of the year for IPOs.”
The Russian invasion of Ukraine and increased interest rates have slowed global IPO activity. According to Bloomberg data, around $1.1 Billion has been raised by companies through first-time share sale in the country so this year. This is down from $2.6 Billion in the same period 2021.
India’s capital market fundraising will remain robust in the next six to 12 months as companies such as Life Insurance Corporation and some technology companies are still looking to list, Thawani said. He added that most of these firms will look for domestic listings rather than listing overseas.
Thawani stated that private equity funds will continue to increase India’s mergers and acquisitions volume. Conglomerates consolidating their domestic business is another driving factor.
HDFC Bank Ltd., the country’s most valuable bank, agreed to take over the country’s largest mortgage lender Housing Development Finance Corporation in a deal valued at about $60 billion. Thawani stated that the in-house merger provides a benchmark for larger financial institutions to consider what their future plans should be. He also suggested that there might be more consolidation in this sector.
Nomura anticipates a fair amount of activities in India related to the governance, social, and environmental themes.
“I would say in the next 12 months you should expect maybe one or two capital market listings from the renewable sector,” Thawani said.
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