India stood out as one of the few bright spots for global IPO activity in 2023. A strong domestic economy and rising corporate earnings enabled India to deliver more IPOs than any other jurisdiction.

View full image: India IPO count, 2017 – 2023 (PDF)

In 2023, India IPO proceeds totaled US$7.89 billion, which is in line with the US$7.99 billion recorded in 2022. The growth in the number of IPOs, however, is what has encouraged investors, with the IPO count for 2023 coming in at 234, the highest annual total since 2017 and an increase of 56 percent on the 150 listings recorded in 2022.

Activity was particularly buoyant in the second half of last year, accounting for US$5.81 billion of the annual issuance and 159 IPOs. The high volume of new IPOs coupled with the gains across the wider stock market helped to push the total market capitalization of listed companies in India to approximately US$4 trillion, overtaking Hong Kong as the world’s seventh-largest market, according to the Financial Times.

View full image: India IPO deal value, 2017 – 2023 (PDF)

A strong start to 2024

Momentum from H2 2023 has carried into 2024. By the end of January 2024, India had already delivered 21 IPOs, raising US$678 million—a huge jump on the US$17 million recorded in January 2023.

More IPOs are anticipated from a range of sectors and sources, with at least 66 companies filing listing documents with India's securities regulator, according to the Financial Times, citing brokerage firm IIFL.

View full image: Top 10 IPOs, India Stock Exchange, by deal value, in 2023 (PDF)

For example, the Indian subsidiaries of multinational corporations have performed so well that several IPOs of these entities are now in the cards. According to multiple publications, large IPOs for marquee global companies with Indian subsidiaries are looking to tap into the Indian capital markets to unlock value from their Indian operations and to increase their connections with India.

Domestic businesses are also positioning themselves to take advantage of favorable market conditions, with Aadhar Housing Finance, a Blackstone-sponsored housing finance company, among the candidates for a potential IPO.

Encouraging fundamentals

The positive outlook for IPO activity in India is underpinned by a combination of favorable fundamentals.

Investment in infrastructure, growth in manufacturing and steady consumer spending have made India the fastest-growing economy in the G-20, and ratings agency Moody’s has forecasted a GDP growth of just under 7 percent for 2024.

India has also enjoyed increasing inflows of foreign capital, as investors have moved to diversify their Asia-Pacific portfolios in response to the cooling growth in China. Capital inflows into India from overseas investors reached record levels during the past year.

Meanwhile, rapid growth in digital infrastructure has helped to boost retail investment in Indian equities, with the number of share trading accounts in the country totaling a record high of nearly 140 million. As a result, India's mutual funds industry is booming, with mutual fund assets under management increasing by almost 20 percent in 2023, according to Morningstar, boosting a growing middle class that is investing their savings in equity markets.

Outward looking

As India's economy, investor base and stock markets grow, Indian businesses and regulators are starting to look beyond the domestic market to international opportunities.

The Indian rupee is still subject to government foreign exchange controls and, thus, for many years, local businesses have not been able to pursue listings overseas. However, the government has now set up an international finance center in Gujarat (also known as GIFT City) where Indian issuers will be able to raise capital in foreign currency from international investors.

Previously, Indian companies could only secure capital from overseas exchanges through the American or Global Depositary Receipts. But it is hoped that the option to list in GIFT City will help domestic companies access larger pools of global capital and secure better valuations.

As India consolidates its position as a leading global economy, the country's businesses and policymakers are increasingly looking to leverage domestic success on an international stage.

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