India sizzles in global equity capital markets amid deals drought in Asia

India’s bulging pipeline of large block trades and listings such as the US$3 billion initial public offering (IPO) of Hyundai Motor’s unit will draw more funds to a market whose share of global equity capital market deals hit a quarterly record this year, bankers said. A paucity of deals elsewhere in Asia will add to the impetus for capital flows into India, they added.

Higher global interest rates, geopolitical tensions, as well as China’s economic slowdown and its move to restrict IPOs to support its secondary markets, have led to a slump in equity dealmaking across Asia. India, on the other hand, has emerged as the second busiest market in the world for equity capital market (ECM) deals after the United States.

Indian firms raised US$2.3 billion in the first quarter of 2024 in IPOs, according to LSEG data, up more than 12 times the US$166.5 million raised in the same period last year, the data showed. Total ECM deals rose 139 per cent, making it the most active market across Asia-Pacific, including Japan, where activity was down 46.8 per cent, and accounted for 10.05 per cent of the global total in the first three months, a record high for any quarter.

“The pipeline and activity level has never been as big or as busy. We are seeing many more billion dollar-plus transactions, it’s unbelievable,” said Rahul Saraf, Citigroup’s India head of investment banking.

The National Stock Exchange, the country’s largest bourse, was the third most active listing venue globally in Q1, behind the New York Stock Exchange and Nasdaq. “If you look at global liquidity, where would a large family office or global fund like to put money in the current environment? It’s most likely between the US, India and Japan,” said Saraf.

Among the large deals in the pipeline, the listing of South Korean automaker Hyundai Motor’s India unit is on track to be the country’s largest-ever IPO as it aims to raise up to US$3 billion in 2024 in a deal that would value the carmaker at up to US$30 billion. Budget supermarket chain Vishal Mega Mart is also planning a US$1 billion IPO that would value the company at up to US$5 billion.

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“In terms of upcoming deals ... the size of the deals is getting larger and more companies are lining up for listing later in the year, once elections are out of the way,” said Sumeet Singh, Aequitas Research director. India’s general elections will be held over seven weeks from April 19. REUTERS