Indian Elections Reignite IPO Prospects

After waiting nearly two years, India’s GMR Energy plans to file an IPO prospectus in coming days to raise about $250 million, sources with direct knowledge of the deal said, starting what bankers hope is an election-fuelled revival in equity raising.

Many capital-starved companies, reluctant to tap a market with little appetite for fresh equity, are dusting off listing plans in the expectation that elections starting next month will usher in an investor-friendly government headed by opposition leader Narendra Modi.

Fresh equity sales in India slowed sharply in 2013 to $9.4 billion, down from $15 billion in 2012 and a record $31 billion in 2007, as slowing economic growth, corruption scandals and delays in project approvals battered sentiment.

Investor hopes that the opposition Bharatiya Janata Party (BJP), led by its prime ministerial candidate Modi, will prevail in the election sent the stock market to a record high this month.

“A stable government after the election, which should be able to end the policy paralysis and remove some of the hurdles in doing business, will be a major enabling factor in reviving the IPO market,” said Harish H.V., head of corporate finance in India at advisory firm Grant Thornton.

While the United States is in the midst of an IPO boom, a market rally that began in September in India has yielded little fresh issuance.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza