India IPO frenzy continues as state power firm’s unit plans 100 billion rupees listing

THE renewable-energy arm of India’s state-run power producer NTPC is seeking to raise as much as 100 billion rupees (S$1.5 billion) in its initial public offering, underscoring how the world’s busiest market for listings is now attracting bigger deals.

NTPC Green Energy plans to use the proceeds to invest in its subsidiary, capitalising on India’s burgeoning power needs, and repay loans taken by the unit, according to a draft prospectus dated on Wednesday (Sep 18).

The New Delhi-based firm joins companies such as SoftBank-backed Swiggy and the Indian units of LG Electronics and Hyundai Motor that are also seeking US$1 billion-plus IPOs. The bigger offerings – after a slew of small deals worth less than US$50 million – will add depth and offer global investors more opportunities to participate in what is increasingly one of the most important emerging markets globally.

“The outlook remains strong with a number of large deals still in the pipeline,” said Sumeet Singh, head of equity research at Aequitas Research. Investors have been drawn by the increasing size and quality of the deals, he said.

Enthusiasm for IPOs has boosted India’s listing proceeds to US$8.8 billion so far in 2024, already exceeding the annual tallies for the two preceding years, data compiled by Bloomberg show. The nation’s rapid economic expansion has made it a bright spot amid challenges facing former favourites such as China, with its markets grabbing more weighting in global indexes. A limited float for big stocks in India is also making these large IPOs attractive.

India has already seen 90 deals this quarter, compared with 54 in the US, making the South Asian nation the busiest IPO market globally, according to data compiled by Bloomberg. In terms of the amount raised, it’s still behind the US and Hong Kong, the markets that hosted the biggest two listings in the world this year.

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Investors in NTPC Green Energy, which has yet to decide its listing date, will be looking to duplicate the gains seen by other debutants. Bajaj Housing Finance Ltd.’s shares more than doubled on their first day of trade this week after the deal raised US$781 million.

Competition for IPO allocations has also been fierce, with domestic mutual funds, international funds and government investors filling up order books. Bajaj Housing Finance’s debut drew bids of more than US$39 billion last week.

“It’s not easy to get in unless you are a large long-only,” Aequitas Research’s Singh said.

NTPC Green has solar and wind-power assets, and operates in more than six states. The company posted a net income of 1.4 billion rupees on revenue of 5.8 billion rupees for the three months through June this year, according to the draft prospectus.

IDBI Capital Markets & Securities, HDFC Bank, IIFL Securities and Nuvama Wealth Management are book-running lead managers of the offering. BLOOMBERG

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