India is set to witness an unprecedented surge in initial public offerings (IPOs) over the next two years, with conglomerates, technology firms, and financial services providers actively seeking capital to fuel growth. According to Debasish Purohit of Bank of America (BofA), 2023 was marked by significant block trades, and 2024 is poised to be the year of IPOs, carrying the momentum into 2025. Purohit predicts that this period will be the busiest for IPOs in India’s history.
Expectations for 2024 and 2025
Purohit anticipates a substantial number of IPOs, with between 5 and 10 tech firms and two or three local subsidiaries of multinational companies launching public offerings during this period. Key players like Reliance Industries, led by Mukesh Ambani, are exploring the listing of entities such as Reliance Jio Infocomm and Reliance Retail Ventures. Additionally, Tata Sons, another major conglomerate, is gearing up to list its financial services unit, in line with the Reserve Bank of India’s directive for certain shadow lenders to go public before 2025. Hyundai Motor is also considering a listing for its Indian business in what could be one of the country’s most significant IPOs.
China Plus Strategy and Investment Inflows
The surge in IPO activity aligns with the growing interest of private equity funds in adopting a “China plus strategy.” Purohit notes that numerous private equity funds are eager to raise capital specifically for investments in India. The country is increasingly becoming an attractive destination for funds seeking diversification and growth opportunities. With an optimistic outlook, Purohit, with over two decades of experience in investment banking, envisions at least two to three funds being raised for India alone.
Mergers and Acquisitions (M&A) Landscape
Purohit identifies three or four broad areas likely to witness significant M&A activity: partnerships between founders of Indian companies and financial sponsors to drive growth, exits or asset sales by some founders amid sector consolidation, and strategic decisions driven by family considerations. These dynamics are expected to contribute to a vibrant M&A landscape, with Purohit suggesting that those securing 7% to 8% of the fee pool will be in a favorable position.
In summary, India is on the cusp of an IPO boom, with conglomerates and tech giants seizing the opportunity to raise capital and unlock value in the vibrant Indian market.
