India's 27% Share in Global IPOs Will Foster Private Market Growth: Krishna Patwari, WWIPL

Mumbai (Maharastra) [India] 02 September: In the first half of 2024, IPO activity saw significant growth, with India leading globally. According to the EY Global IPO Trends Q2 2024 report, India's share of global IPOs rose from 13% last year to 27% this year, underscoring the country's robust market ecosystem and its appeal to startups and investors alike.

India's leading role in global IPO issuance, & in terms of deal volume highlights the strength of its private market ecosystem. IPOs not only raise capital from the public but also provide key exit strategies to private equity investors, signalling a healthy and expanding market that offers increasing opportunities for private market investors.

How is it Impacting the Private Markets?

The IPO outlook for the year is positive, driven by strong markets, lower volatility, and reduced inflation. India leads with 163 companies going public by August 2024. Though most IPOs are small to medium-sized, this growth showcases India's readiness for larger deals. Krishna Patwari, Founder of Wealth Wisdom of India Pvt. Ltd. notes key shifts in the IPO landscape impacting India's unlisted market.

Growing Investor Confidence - The increase in IPO activity reflects growing investor confidence. As per the EY Global IPO Trends Q2 2024 report, in FY 2023-24 Indian IPOs have significantly outperformed benchmark indices, delivering approx 55% returns versus the BSE SENSEX's 11%. The frequent use of over-allotment options and stable post-IPO prices highlight high-quality offerings and a promising environment for public companies and unlisted market investors.

Shift in Investment Strategies - Increased demand of IPO Shares may prompt investors to target early-stage companies before valuations rise, potentially boosting growth-stage investments. Stable RBI interest rates, positive economic trends, and supportive policies will influence the IPO market. SEBI's plan to raise the minimum trading size of new options from 5 Lakh rupees to 15-20 Lakh rupees, and eventually to 30 Lakh rupees, will impact retail investor strategies. Proposals to limit weekly expiries to one option per exchange could also influence market dynamics and attract more funds to capital and private markets.

Increased Liquidity - Increased IPO activity in India enhances market liquidity and attracts new investors. With a growing number of companies going public, private equity and venture capital funds see improved exit opportunities and returns. The IPO frenzy of 2024 has revealed that some Mainboard IPOs get oversubscribed as much as 100x to 300x times, mainly due to a strong investor appetite for IPO shares. It's a trend in Indian private markets that IPO-bound companies attract stock market investors.

This year, IPO-bound companies like Swiggy, NSE, Hero Fincorp, HDB Financials, One Mobikwik, Manjushree Technopack, Vikram Solar, Waaree Energies, and OYO have been top-traded pre-IPO stocks in India. This dynamic environment fosters innovation, funding, and supportive regulations.

Krishna Patwari further adds, "India's IPO market is thriving, with significant growth in 2024. The country's dominance, capturing 27% of global IPOs, and impressive listings are setting the stage for continued expansion. With a projected GDP increase of 7.2% for FY24-FY25 and robust infrastructure investments, India's financial landscape promises further opportunities and growth in the coming years."

Additionally, the IPO market is currently shaped by the rising demand for New age companies & the sectors like Defence, AI Technology, Renewable Energy electric vehicles (EVs). In August 2024, the stock market witnessed a spike in IPOs, including OLA Electric Mobility, which went public on August 9 at Rs 76 per share. By August 23, OLA's share price had surged to Rs 126.21, marking a 66% increase and a market cap of Rs 55,669 crore.

This strong performance has boosted investor confidence in Indian technology and new-age companies, highlighting the potential for startups to achieve significant growth and encouraging more firms to enter the IPO market.

In early 2024, IPO activity surged globally, with India seeing significant growth due to investments in infrastructure and transportation. IPO activity surged in South Korea, India, and Malaysia, with increases of 450%, 193%, and 200% respectively from last year. In India, the IPO market has notably expanded, with 40 out of 49 main board IPOs and 124 out of 164 SME IPOs showing gains in FY 2024-25. This trend indicates a promising outlook for India's financial sector, with expectations of continued growth in public offerings, enhanced corporate profits, and a rise in SME listings.

Krishna Patwari, Founder, WWIPL, notes key shifts in the IPO landscape impacting India's unlisted market.