Foreign inflows, local revival may drive IPO boom in 2021

More companies in India are expected to line up their initial share sales in 2021, seeking to tap booming investor demand amid a rush of foreign liquidity and stronger-than-expected recovery in Asia’s third-largest economy.

According to industry experts, handsome returns reaped by investors, especially in the retail segment, will likely encourage them to look for more IPO bets next year. Indian firms raised about ₹26,000 crore via share sales this year, more than double that of last year.

“Next year may be the year for IPOs. In 2020, we witnessed many QIPs, especially from financial services, and while some of that will continue in 2021, IPO activity should definitely be higher than this year,” said Anuj Kapoor, managing director and head of investment banking at UBS India.

“Companies that put IPO plans on hold or delayed them due to Covid have accelerated their plans, given the positive market environment. We have seen better corporate earnings in the recent quarter, and expectations are that the economy will bounce back strongly in 2021. That should also aid IPO plans of many companies. Q1 will be a busy period for IPOs, based on the pipeline,” he added.

Of the 13 companies that went public this year, nine delivered listing gains for investors and some such as Burger King India Ltd and Happiest Minds Technologies Ltd saw share prices more than double on listing day.

“Till the time you continue to see bullishness in the secondary market, you will also see action on the primary market front,” said Pranav Haldea, managing director of Prime Database group.

He said firms that are well-prepared will look to launch IPOs in the near term to benefit from the current exuberance in the secondary markets.

“Over the last few years, the IPO window has become narrower. While earlier you used to see a few deals regularly, in the last five years, you see a huge bunching up of deals. There are these windows where you find this exuberance in the secondary markets, and companies want to be ready to tap that window. Now as well, the ones ready with Sebi approval will try to launch deals in the near future,” he said.

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