India sizzles in global equity capital markets amid deals drought in Asia

India has emerged as the second busiest market in the world for equity capital market (ECM) deals after the United States.

Sydney: India's bulging pipeline of large block trades and listings such as the $3 billion IPO of Hyundai Motor's unit will draw more funds to a market whose share of global equity capital market deals has already hit a record this year, bankers said.

A paucity of deals elsewhere in Asia will add to the impetus for capital flows into India, they added.

Higher global interest rates, geopolitical tensions as well as China's economic slowdown and its move to restrict initial public offerings (IPOs) to support its secondary markets have led to a slump in equity dealmaking across Asia.

India, on the other hand, has emerged as the second busiest market in the world for equity capital market (ECM) deals after the United States.

Indian companies raised $2.3 billion in the first quarter of 2024 in IPOs, according to LSEG data, up more than 12 times the $166.5 million raised in the same period last year, the data showed.

Total ECM deals rose 139 per cent, making it the most active market across Asia Pacific, including Japan, where activity was down 46.8 per cent, and accounted for 10.05 per cent of the global total in the first three months, a record high.

"The pipeline and activity level has never been as big or as busy. We are seeing many more billion dollar-plus transactions, it's unbelievable," said Rahul Saraf, Citigroup's India head of investment banking.

"India is really coming of age in the size, scale and quality of issuers."

The National Stock Exchange, the country's largest bourse, was the third most active listing venue globally in the first quarter, behind the New York Stock Exchange and Nasdaq.

"If you look at global liquidity, where would a large family office or global fund like to put money in the current environment? It’s most likely between the US, India and Japan," said Saraf.

Among the large deals in the pipeline, the listing of South Korean automaker Hyundai Motor's India unit is on track to be the country's largest ever IPO as it aims to raise up to $3 billion in 2024 in a deal that would value the car marker at up to $30 billion.

Budget supermarket chain Vishal Mega Mart is also planning a $1 billion IPO that would value the company at up to $5 billion.

"In terms of upcoming deals ... the size of the deals is getting larger and more companies are lining up for listing later in the year, once elections are out of the way," said Sumeet Singh, Aequitas Research director who publishes on Smartkarma.

India's general elections will be held over almost seven weeks from April 19.

Citigroup heads the league table for Indian ECM activity, according to LSEG, ahead of Bank of America and ICICI Bank.