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By 2024 and beyond, India will receive at least $30 billion annually in primary and secondary share sales as companies and their shareholders are willing to tap the market, according to JPMorgan Chase & Co.
According to data compiled by Bloomberg, the sale of additional shares in the country’s listed companies will exceed $10 billion this year, more than the total increase in 2022. The momentum is likely to continue next year and beyond as owners of Indian companies look to raise funds for other investments, said Abhinav Bharti, head of equity capital markets in India. Demand from local asset managers as well as foreign investors is driving the stock sell-off, he said.
“You can earn an average of $10 billion every year now from 2024 through block trades,” he said in an interview in Mumbai. “I can see India building blocks as a market that can generate over $30 billion in primary and secondary sales to companies every year.”
JPMorgan is the top manager of equity and rights offerings in India in the first eight months of 2023, according to data compiled by Bloomberg League Tables. Bank of America has nearly 15% market share, followed by Kotak Mahindra Bank Limited with 11% market share.
As opposed to curbing trading, India’s IPO activity has slowed significantly this year, tracking a slowdown in trading globally. Companies could raise about $3.2 billion in initial share sales in 2023, down from $5.5 billion in the same period last year, according to data compiled by Bloomberg. There have been no $1 billion IPOs since the listing of Life Insurance Corporation in India’s $2.7 billion list in May 2022.
A couple of billion dollars worth of IPOs could return to India after the country’s federal elections between April and May, Bharti said. The banker expects large IPOs to come from sectors such as consumer, technology and financial services.
Strong corporate earnings and strong economic growth are attracting investors even as others are fleeing Asia’s emerging markets. China’s currency has tumbled amid concerns over the once-fast-growing nation’s dire economic outlook and geopolitical tensions.
“Due to the recent softness in Chinese economic data, many of these global EM fund managers are underweight on China and where you can now go and deploy more capital, you should also be overweight,” Bharti said. “India is benefiting from this.”
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