Public issues set to peak in 2017, says Baker & McKenzie

India’s initial public offerings are set to reach a record-breaking value of $6.8 billion this year, a new report by global law firm Baker & McKenzie has said. This is a significant jump when compared to the actuals of $2.08 billion and $ 4.04 billion raised in calendar years 2015 and 2016, respectively.

Ashok Lalwani, head of Baker McKenzie’s Global India Practice, said : “I think the flurry of IPO activities is likely to continue for the rest of this year and well into the early part of 2018, as Corporate India seeks to take advantage of a surging Indian equity market.”

In its latest report — Global Transaction Forecast 2018, Baker McKenzie has pegged the IPO transaction value forecast at $5.32 billion and $5.09 in 2018 and 2019, respectively. “As the country prepares for General Elections in 2019, I will not be at all surprised to see a surge of IPOs by private companies in the next few months before the deal window closes,” Lalwani said.

The Indian IPO market continues to flourish as institutional and retail investors look for productive avenues to invest in, in a market with a shrinking interest rate, low-bond yields, capped gold investments and real estate investments under scrutiny.

“From a sector perspective, financials, industrials and healthcare have been some of the busiest in terms of domestic listing. I think, we can expect to see strong deal activity in these sectors and in real estate in the next 18 months,” Lalwani said.

Finance Minister Arun Jaitley’s plans to raise ₹72,500 crore ($10.9 billion) from disinvestment in 2017 and 2018, including ₹15,000 crore ($2.3 billion) from strategic asset sales, is expected to help sustain this IPO momentum, according to the report..

Meanwhile, the Baker McKenzie report has also forecast that India’s mergers & acquisitions value is expected to reach $46.5 billon (944 deals) in 2017, boosted by Rosneft’s $13-billion takeover of Essar. The 2017 figure represents a 165 per cent increase in value and a 70 per cent jump in volume from 2016 ($17.5 billion, 553 deals).

Pending the results of the 2019 national elections, there is potential for more ambitious economic reforms. The forecast for 2020 is, therefore, not set in stone and deal trends could move in either direction, the report said.