News Digest

15 December 2017
IPO activity likely to remain high next year, says

As far as mergers and acquisitions (M&As) and private equity (PE) buyout deals in India are concerned, 2017 has been fairly active, with successful initial public offerings (IPOs) providing smooth exits for PE funds which have sold shares worth $1.17 billion in 2017 in the market. The figure is almost 25% higher than the $935 million in stock sold through IPOs in 2016. In an interview, Kaustubh Kulkarni, managing director and head of investment banking at JP Morgan India Pvt. Ltd, talks about the various factors that have driven the large M&A, PE and IPO deals in 2017 and gives his views on the deal market in 2018. Edited excerpts: There is a surge in the IPO market and valuations are quite high. Is this a trend? Deal activity has seen a surge this year if you look at the quantum of capital-raising, both in terms of number of deals and amount raised per IPO. We are no longer talking about Rs400-500 crore IPOs. The average IPO size today is around Rs1,500-2,000 crore, which indicates that the size of companies coming into the market is large. The size of capital-raising this year is meaningfully higher as compared to previous years. Also, if you look at equity-raising activities, the private sector in 2012-14 raised a limited amount through the market. During 2013-14, many follow-on transactions took place. Now IPOs are forming a larger part of capital-raising while follow-ons are slightly lower. Liquidity in the market is high, interest from FIIs and MFs is high and on the supply side, deal activity has also increased.

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