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Thanks to a flurry of initial public offerings, block deals and private placements, underwriting fees in the equity capital markets (ECM) rose 110% from a year earlier to touch $471 million, data from the London Stock Exchange Group (LSEG) showed, the biggest nine-month haul since records started in 2000. Jefferies topped the league by handling ECM activities worth $5 billion, cornering 11% of the market.
“Both issuers and investors are capitalizing on the favourable market conditions and strong secondary markets, raising capital through additional share sales and new listings in India’s equity capital markets,” said Elaine Tan, senior manager at LSEG Deals Intelligence in a report.
Indian companies raised about $9 billion through IPOs in the January-September period, nearly twice as much as in the same period of 2023. The wave of IPOs is expected to continue, with prominent names such as Swiggy, Ofbusiness, Infra.Market, Hyundai Motor India and Afcons Infrastructure Ltd in the IPO queue. LSEG’s Tan also pointed to the growing list, as multinationals such as LG Electronics plan to list their Indian units.
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India ECM—which includes IPOs, block deals follow-on share sales and private placements- hit a record $49 billion in the first nine months, up about 115% from a year ago, also surpassing the annual record set in 2020 by proceeds. The number of ECM offerings was 61% more than in 2023. Follow-on offerings, which fetched 81% of overall ECM proceeds clocked in at $40 billion, up 119% from a year ago, while the number of such offerings grew 59% year-on-year.
The optimism is largely fuelled by strong inflows from domestic investors which is driving demand, said Bhavesh Shah, managing director and head of investment banking at Equirus. “On the supply side, we’re seeing the emergence of promising business models that are IPO-worthy. It would be hard to predict the short-term performance of the secondary market, the capital market sentiment and hence the IPO market as well. However, structurally, the trend seems to be very strong as IPOs seem to be a win-win for companies to raise funds and investors to deploy funds lucratively,” Shah said.
Steep market valuations have also paved the way for block deals, with proceeds used for a host of purposes including debt repayment. This was especially the case with many multinational companies, many of which have sold some of their shares to their Indian counterparts. Examples include Conagra Brands’ sale of its controlling stake in India’s Agro Tech Foods (ATFL); British American Tobacco’s (BAT) sale of a partial stake in ITC; and Japan’s Sumitomo Wiring Systems sold a 4.4% stake in Samvardhana Motherson International.
Indian markets have typically remained resilient through macroeconomic and geopolitical shocks, said Gaurav Sood, managing director and head, equity capital markets, Avendus Capital. “Indian markets are distinctive in that they are not dependent on foreign inflows and have a strong domestic investor ecosystem that is hungry for ideas,” said Sood, adding several large deals successfully played out across primary and secondary markets in times of increased volatility, showcasing the depth of the markets.
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The current year has been a blockbuster for capital markets as it surpasses the last two years by volume and value, Sood said. “The remainder of the year will be no different. We are seeing a resurgence in new-age IPOs and believe that upcoming MNC IPOs are the beginning of a multidecadal trend,” he said. With over a billion dollar deals that are on the horizon across primary and secondary markets, Sood anticipates strong aftermarket performance even if valuations are tempered by overall volatility.
Despite rising geopolitical risks and fluctuating commodity prices, Indian markets have been among the best performers in emerging economies, largely driven by pro-business policies and macroeconomic stability, said Neha Agarwal, managing director and head of equity capital markets, JM Financial Institutional Securities Ltd. “This strong performance, relative to the rest of the world, is mainly due to India’s resilience against global geopolitical and economic disruptions, its stable domestic macroeconomic outlook, and a robust domestic investor base,” Agarwal said.
Additionally, the upcoming large IPOs, such as Hyundai, NTPC Green Energy, Hexaware, Swiggy and Vishal Megamart signal strong momentum. Agarwal expects this wave of strong activity to continue, with a potential $8-10 billion being raised in the coming months, underscoring investor appetite and market confidence.
The industrial sector accounted for the majority of the ECM activity, with 23.0% market share worth $11 billion in proceeds, a 137% increase from a year ago. Financials followed with 15% market share, as proceeds grew 79% compared to the first nine months of 2023. Telecommunications came in third, capturing 11.5% market share, raising $6 billion, a significant increase compared to the same period last year.
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Meanwhile, underwriting fees in debt capital markets (DCM), where companies issue bonds and debentures, fell 4% to about $183 million during the period.
Overall investment banking fees—which includes ECM and DCM – fell 15% to about $842 million during the nine months. Here, Kotak Mahindra Bank commanded the biggest share of 7.3%, followed by Axis Bank at 6.8%.
“It will be difficult to predict how the markets will perform given the geopolitical situation in the Middle East is very dynamic,” said Prashant Rao, director and head of equity capital markets at Anand Rathi Investment Banking. “While the latest conflict might result in temporary volatility in the markets, Indian markets have shown resilience through this calendar year. Further, despite FIIs being net sellers with a total outflow exceeding ₹1.26 trillion, Indian markets have not only sustained but have given robust returns with Nifty and Sensex giving 18.71% and 16.64% respectively,” Rao added.
The data shows syndicated lending fees also fell 58% from the comparable period last year, generating $76 million in the first nine months of 2024. At the same time, completed M&A advisory fees declined 72% year-on-year, totalling $111 million.
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In what is the lowest first nine-month total since 2017, M&As with Indian involvement totalled $57 billion, a 20% decline from a year ago. Notably, the US was the most active nation doing cross-border deals with India.
Tan stressed on the fall in deal-making activity, but remained optimistic as some sectors including infrastructure, renewable energy, healthcare, and fast-moving consumer goods will experience high growth potential. This is expected to be driven by India’s growing middle-class population with higher disposable incomes.
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