India's IPO market loses steam on global market jitters
At least two initial public offerings worth $759 million are expected to be delayed, adding to a growing list of Indian companies deciding to postpone plans for initial public listings due to weak investment sentiment, investment bankers say.
Education loan provider Avanse Financial Services and contract drug maker Anthem Biosciences are among companies that will join notable names such as South Korean conglomerate LG Electronics' India unit, to put IPO plans on hold for now, the bankers said.
'There are only select institutional investors coming in at this point given the global uncertainty,' Suraj Krishnaswamy, the managing director of investment banking at Axis Capital, said. 'And India-Pakistan tensions have not helped.'
The trend is an indication that global trade frictions and geopolitical tensions have clouded the economic outlook and caused companies to delay their capital raising and investment plans.
On Tuesday, the market debut of Indian electric scooter maker Ather Energy will be a gauge of investor appetite.
In pre-market activity, its shares have fluctuated around its issue price of 321 rupees ($3.81), indicating a muted start.
Avanse Financial and Anthem Biosciences did not respond to Reuters queries seeking comment.
'There are only select institutional investors coming in at this point given the global uncertainty,' Suraj Krishnaswamy, the managing director of investment banking at Axis Capital, said.
'And, India-Pakistan tensions have not helped.'
As many as 58 companies with Indian regulatory clearance have not launched their IPOs due to global market disruptions caused by US President Donald Trump's tariffs, which have negatively affected business sentiment and fuelled recession fears.
The regulatory clearances of some of these firms will expire over the next few months, PRIME Database Group MD Pranav Haldea said, forcing them to either restart the entire IPO process or seek an extension from India's market regulator.
India's benchmarks to open higher; Ather Energy set for market debut
India, which was the world's second-largest IPO market last year, has seen a 58% slump in IPOs listed on the main stock exchanges so far this year, according to PRIME Database.
The total fundraising on all the listing platforms has seen an 18% drop, LSEG data showed.
'Things are moving slowly, but it is not a complete standstill. In the current scenario, most of the IPOs are in a similar situation,' said an investment banker, who requested anonymity as he was not authorised to speak to the media.
Company executives agreed. 'You don't want to file when you do not know how long the volatility will last,' online automobile marketplace Droom's CEO Sandeep Aggarwal said, adding that his firm had decided against filing draft IPO papers by June as it had originally planned.
Worried investors
Retail investors, having suffered significant losses due to market volatility, are being more cautious with new investments, resulting in a lukewarm reception for this year's IPOs.
Ather Energy, which decided to proceed with its $352 million IPO despite the uncertainty, had to cut its target valuation by 44% and lower its offer size though its IPO was fully subscribed.
'Ather can be a risky bet given the current geopolitical issues and high valuation,' Hem Securities senior research analyst Astha Jain said. The unpredictable environment is prompting bankers to urge their prospective IPO clients to adjust their strategies.
'If the issue is important, then you may have to reconsider valuations. If valuation is important, then you have to wait for some more time,' said Bhavesh Shah, the managing director and head of investment banking at Equirus.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
2 hours ago
- Express Tribune
Trump and Xi hold rare call as trade tensions and Taiwan concerns escalate
US President Donald Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, REUTERS Listen to article US President Donald Trump and Chinese leader Xi Jinping confronted weeks of brewing trade tensions and a battle over critical minerals in a rare leader-to-leader call on Thursday that left key issues to further talks. During the more than one-hour-long call, Xi told Trump to back down from trade measures that roiled the global economy and warned him against threatening steps on Taiwan, according to a Chinese government summary. But Trump said on social media that the talks focused primarily on trade led to "a very positive conclusion," announcing further lower-level US-China discussions, and that "there should no longer be any questions respecting the complexity of Rare Earth products." He later told reporters: "We're in very good shape with China and the trade deal." The leaders also invited each other to visit their respective countries. The highly anticipated call came in the middle of a dispute between Washington and Beijing in recent weeks over "rare earths" minerals that threatened to tear up a fragile truce in the trade war between the two biggest economies. It was not clear from either countries' statements that the issue had been resolved. A US delegation led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will meet with their Chinese counterparts "shortly at a location to be determined," Trump said on social media. The countries struck a 90-day deal on May 12 to roll back some of the triple-digit, tit-for-tat tariffs they had placed on each other since Trump's January inauguration. Though stocks rallied, the temporary deal did not address broader concerns that strain the bilateral relationship, from the illicit fentanyl trade to the status of democratically governed Taiwan and U.S. complaints about China's state-dominated, export-driven economic model. Since returning to the White House in January, Trump has repeatedly threatened an array of punitive measures on trading partners, only to revoke some of them at the last minute. The on-again, off-again approach has baffled world leaders and spooked business executives. Major US stock indexes were higher on Thursday. China's decision in April to suspend exports of a wide range of critical minerals and magnets continues to disrupt supplies needed by automakers, computer chip manufacturers and military contractors around the world. Beijing sees mineral exports as a source of leverage - halting those exports could put domestic political pressure on the Republican US president if economic growth sags because companies cannot make mineral-powered products. The 90-day deal to roll back tariffs and trade restrictions is tenuous. Trump has accused China of violating the agreement and has ordered curbs on chip-design software and other shipments to China. Beijing rejected the claim and threatened counter-measures. "The US side should take a realistic view of the progress made and withdraw the negative measures imposed on China," the Chinese government said in a statement summarizing Xi's call with Trump published by the state-run Xinhua news agency In recent years, the United States has identified China as its top geopolitical rival and the only country in the world able to challenge the US economically and militarily. Despite this and repeated tariff announcements, Trump has spoken admiringly of Xi, including of the Chinese leader's toughness and ability to stay in power without the term limits imposed on US presidents. Trump has long pushed for a call or a meeting with Xi, but China has rejected that as not in keeping with its traditional approach of working out agreement details before the leaders talk. The US president and his aides see leader-to-leader talks as vital to sort through log-jams that have vexed lower-level officials in difficult negotiations. Thursday's call came at Trump's request, China said. According to a press release by the Foreign Ministry of China, President Xi emphasized that the United States must handle the Taiwan question with prudence, so that the fringe separatists bent on 'Taiwan independence' will not be able to drag China and America into the dangerous terrain of confrontation and even conflict. President Trump said that he has great respect for President Xi, and the US-China relationship is very important. The US wants the Chinese economy to do very well. The US and China working together can get a lot of great things done. The US will honor the One-China policy. The meeting in Geneva was very successful, and produced a good deal. The US will work with China to execute the deal. The US loves to have Chinese students coming to study in America. President Xi welcomed President Trump to visit China again, for which President Trump expressed heartfelt appreciation. It's not clear when the two men last spoke. Both sides said they spoke on Jan. 17, days before Trump's inauguration and Trump has repeatedly said that he had spoken to Xi since taking office on Jan. 20. He has declined to say when any call took place or to give details of their conversation. China had said that the two leaders had not had any recent phone calls. The talks are being closely watched by investors worried that a chaotic trade war could disrupt supply chains in the key months before the Christmas holiday shopping season. Trump's tariffs are the subject of ongoing litigation in US courts. Trump has met Xi on several occasions, including exchange visits in 2017, but they have not met face to face since 2019 talks in Osaka, Japan.
Business Recorder
4 hours ago
- Business Recorder
Oil rises 1% as China, U.S. teams to meet following Trump, Xi trade call
HOUSTON: Oil prices rose 1% on Thursday, rebounding from the previous day's drop as traders responded to news that U.S. and Chinese teams will meet shortly, following a phone call on trade held between U.S. President Donald Trump and Chinese leader Xi Jinping. Brent crude futures were up 65 cents, or 1%, at $65.51 a barrel by 11:36 a.m. EDT (15:36 GMT). U.S. West Texas Intermediate crude rose 66 cents, or 1.05%, to $63.51 a barrel. 'If we step back from the brink of a major trade war, it will increase demand expectations for oil both in the U.S. and in China,' said Phil Flynn, senior analyst with Price Futures Group. Earlier, the official Xinhua news agency reported that the talks were held at Trump's request. The news encouraged investors a day after oil fell 1% as data showed U.S. gasoline and distillate stockpiles grew more than expected, reflecting weaker demand in the world's largest economy. Geopolitical events and wildfires in Canada that threaten to reduce oil production are providing further price support, despite a potentially over-supplied market in the second half of the year with expected OPEC+ production hikes, PVM analyst Tamas Varga said. Curbing gains on Thursday, Saudi Arabia, the world's biggest oil exporter, cut its July prices for Asian crude buyers to nearly the lowest level in two months. The Saudi price cut followed a move by OPEC+ last weekend to increase output by 411,000 barrels per day (bpd) for July. Oil eases after US data shows large builds in fuel stocks The strategy of Saudi Arabia, OPEC's de facto leader, is partly to punish over-producers by potentially unwinding 2.2 million bpd between June and the end of October, in a bid to wrestle back market share, Reuters previously reported. Data on Wednesday showed that the U.S. services sector contracted in May for the first time in nearly a year. Additionally, the number of Americans filing new applications for unemployment benefits increased for the week ending May 31, marking the second straight weekly jump, the Labor Department said on Thursday, pointing to softening labour market conditions amid mounting economic headwinds from Trump's tariffs. The release on Friday of the U.S. nonfarm payrolls report for May could influence the U.S. Federal Reserve's interest rate policy, while the market's focus will be also on geopolitical tensions in the Middle East, UBS analyst Giovanni Staunovo said.
Business Recorder
4 hours ago
- Business Recorder
Mining stocks boost UK's FTSE 100, midcaps hit turbulence
Britain's benchmark FTSE 100 closed a shade higher on Thursday with mining stocks leading gains, tracking higher metal prices in a choppy session as investors looked for new developments on the trade front, while a drop in Wizz Air shares hit midcaps. The blue-chip index FTSE 100 closed 0.1% higher, marking its fifth consecutive single-day gain, while the midcap index fell 0.2%. Industrial metal miners were among the top gaining sub-sectors, up 1.8% as copper prices touched a two-month high. A gauge for precious metal miners also climbed 3.5%. Losses in advertising group WPP and top food retailer Sainsbury's kept a lid on gains in the blue-chip index, as their shares traded without entitlement to a dividend. Among midcaps, Wizz Air plunged 27.9% after the budget carrier reported an approximately 62% slide in annual operating profit, citing capacity constraints due to grounded planes. Other airline stocks like easyJet and ICAG declined about 1% each. On the flip side, Dr Martens jumped 25.8% after the bootmaker forecast a return to profit growth in the current financial year. Global stocks initially swung higher around midday after U.S. President Donald Trump and Chinese leader Xi Jinping had a phone call, agreeing to further talks between the countries to hash out differences on tariffs. Elsewhere in Europe, the European Central Bank cut interest rates as expected, but hinted at a pause in its year-long easing cycle. Back in Britain, construction firms reduced staff numbers last month at the fastest pace in nearly five years, reflecting higher wage costs and reduced demand, a survey showed. U.S. non-farm payrolls data due out on Friday will also command attention with investors watching for any signs of weakness in the U.S. labour market, which could influence the Federal Reserve's stance on monetary policy.
