Indian IPO markets have had their best first quarter in nine years

The bulls are raging.
The bulls are raging.
Image: Reuters/Arko Datta
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The market for initial public offerings (IPOs) in India is booming.

In the first three months of the financial year 2017—April, May, June—six companies raised Rs5,728 crore ($850 million) through IPOs, according to PRIME database, a capital markets information provider. This was the highest for a first quarter in the last nine years. The last time such a huge amount was raised was in the April-June quarter of 2007-08, with total issuances of Rs13,083 crore.

The numbers are perhaps an indication that IPOs has finally revived, despite much market volatility. Equity markets haven’t seen a lot of action in the last one year, with global events often tripping a good run by stocks. In Aug. 2015, it was the market meltdown in China. More recently, Brexit battered stocks in Asia’s third-largest economy.

But that hasn’t dented investor demand. ”A major revival was witnessed in the IPO market after several dismal years,” Pranav Haldea, managing director of PRIME, said in a release on July 4.

Here’s how the first quarter has fared in the last few years:

The biggest IPO during the quarter was by Equitas, a microfinance firm, which raised Rs2,177 crore. The others were by diagnostics company Thyrocare, gas distributor Mahanagar Gas, business services provider Quess Corp, microfinance firm Ujjivan, and dairy manufacturer Parag Milk Foods.

Half of these had received private equity (PE) or venture capital (VC) investment before. These investors typically use IPOs to sell their stakes/holdings.

Meanwhile, the first quarter also saw an increase in IPOs by small and medium enterprises (SMEs). Around Rs127 crore was raised by 13 firms on the SME platform, compared to the nine IPOs worth Rs42 crore in the same period last year.