For India IPOs, 2016 expected to be best year
4 Jan 2016
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India's benchmark BSE index is down 5.3 percent so far this year, but Deutsche Bank in a report this month said the index should rise more than 11 percent to touch 29,000 by end-2016 helped by a jump in corporate earnings.
Indian IPOs are set to raise more than $5 billion in 2016, a six-year high, as corporate profit growth and a pickup in the economy drive investor demand for equities and lure firms such as Vodafone's local unit to list.
India has been a bright spot in an otherwise dull Asian initial public offering (IPO) market in 2015, with companies in the country raising a combined $2.1 billion, a seven-fold jump over the previous year. In contrast, sums raised by bigger markets such as Hong Kong and Australia, have fallen.
Investment bankers, who forecast the IPO proceeds topping $5 billion in 2016, say besides the Vodafone unit listing, there will be several financial and technology sector companies going public next year.
Volatile markets and slowing economic growth had dampened IPO launches in India in the past few years, and led to sluggish revenue growth and rising debt at companies in Asia's third-largest economy.
But Prime Minister Narendra Modi's push to cut bureaucratic red tape to improve ease of doing business, bolster the country's manufacturing sector and attract more foreign capital is now set to give a boost to the IPO momentum.
And corporate earnings growth is set to quicken.
India's listed large and mid-cap companies are expected to post an average net income growth of 21.6 percent in the next fiscal year beginning in April, up from 9.2 percent in this fiscal, according to Thomson Reuters data.
Top IPO listing in 2016
In what could be 2016's top India listing, Vodafone is expected to float its India unit to raise more than $2 billion, according to several bankers, in the biggest private-sector debut since utility Reliance Power raised $2.9 billion in 2008.
HDFC Life, in which British insurer Standard Life owns a stake, is expected to raise more than $300 million via an IPO next year, bankers said, making it the first insurer to list on the Indian bourses.
Other possible listings include a roughly $150 million IPO by private-equity backed Ujjivan Financial Services, which makes small loans to businesses and farmers, and IT services firm L&T Infotech's about $300 million floatation, they said.
A spokesman for L&T Infotech parent Larsen & Toubro said the unit had filed the prospectus for an IPO.
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