MOSL: INDIA STRATEGY | A blockbuster year of equity issuance-BFSI accounts for the lion’s share in fund raising

​INDIA STRATEGY | A blockbuster year of equity issuance; BFSI accounts for the lion’s share in fund raising

• It has been a spectacular year for the Indian IPO market, with equity issuances across categories increasing ~2.5x over the previous year. This can primarily be ascribed to the optimistic market mood and strong fund flows, with key indices delivering positive returns (Nifty up ~13% in FY18 YTD) for the second consecutive year.
  
• The last 24 months have seen IPOs of companies from several new sectors, such as Life Insurance, General Insurance, AMCs, New-age banks, Staffing and Retailing. This is a good sign for the Indian capital markets, in our view, as it offers investors multiple avenues to play India’s growth story.
  
• Financialization of domestic savings has been the key driver of the IPO cycle – this trend will continue, as we expect a higher share of domestic savings to flow into equities over the next few years. Strong domestic flows, coupled with benign FII liquidity (both in primary and secondary markets), have driven strong fund raising.
  
• Most IPOs/QIPs were in the nature of exits/sell-downs by existing investors or for balance sheet strengthening. As we expect the growth cycle to revive from 2HFY18, the nature of IPOs/QIPs would also be driven by growth requirements. However, a revival of the private capex cycle is a key prerequisite for this, in our view.
  
• In this report, we take a deep dive into this year’s issuances and also the trend for the past few years.