ECM welcomes India-Pak ceasefire: IFR
India's equity capital market welcomed the ceasefire between the country and Pakistan with seven follow-on share offerings totalling Rs201bn (US$2.35bn).
The truce, coupled with a de-escalation in trade hostilities between the US and China, raised investor spirits and sent the Sensex index up 3.7% on May 12.
"That shift in tone has supported a spate of block offerings this week, all of which have traded well. It's a strong signal that the market is open and constructive, and that bodes well for the pipeline of upcoming deals," said Kailash Soni, head of India ECM at Goldman Sachs.
India conducted strikes against Pakistan on May 7, two weeks after 26 civilians were killed in a terrorist attack in the Indian state of Jammu and Kashmir. After four days of shelling and aerial incursions, a ceasefire was announced on May 10. The unexpectedly early truce encouraged bankers to rush deals to the market.
Singapore Telecommunications raised Rs128.8bn (US$1.51bn) through an upsized block in telecoms company Bharti Airtel at Rs1,814.07, a 2.8% discount to Thursday's close of Rs1,867.20.
The deal was increased in size to 71m shares or 1.2% of the capital from 47.6m shares (0.8%). JP Morgan was sole bookrunner.
Controlling shareholder Sajjan Jindal Family Trust raised Rs12bn through a block in private port operator JSW Infrastructure at Rs288.10, a 3% discount to the pre-deal close of Rs297.05 on Thursday.
Around 42m shares or 2% of the capital were sold. Jefferies wa s the sole bookrunner.
Chinese fintech Ant Group has raised Rs21bn through the sale of 25.5m shares in payment company Paytm, officially called One 97 Communications, at Rs823.10 each, a 5% discount to Monday's close of Rs866.05 and above the floor price of Rs809.75. Citigroup and Goldman Sachs were the bookrunners.
Around 40 accounts participated with the majority being overseas. The top 10 were allocated 75% of the deal.
General Atlantic Singapore Fund raised Rs17.9bn through an upsized block in technology services provider KFin Technologies at Rs1,040, a 7% discount to Monday's close of Rs1,117.90 and above the floor price of Rs1,025.
The transaction was upsized to 17.2m shares from 11.8m.
Around 30 accounts participated, including Copthall Mauritius, Kotak Mahindra Mutual Fund and Societe Generale.
IIFL Capital and Investec Capital were bookrunners.
The end of the IPO lockup in food delivery company Swiggy on May 12 prompted an undisclosed vendor to raise Rs10.7bn through a club deal sold in a Rs300–Rs310 range on Tuesday and at a 3.2%–6.3% discount to the pre-deal close of Rs320.30 on Monday.
A handful of investors participated in the club deal, which was crossed on the local stock exchange at multiple prices.
HSBC is understood to have been involved in the transaction.
SoftBank-backed Indian food delivery company Swiggy completed a Rs113bn IPO in November at Rs390.
Controlling shareholder Purnima Ashwin Desai raised Rs6.5bn from an 8.97m-share offer for sale in Aether Industries at Rs725, a 10% discount to Monday's close of Rs805.90 and above the floor price of Rs700.
DAM Capital, JM Financial and UBS worked on the transaction.
German machine tools maker Wendt launched a Rs3.9bn share sale in Wendt India at a floor price of Rs6,500, a 38% discount to the pre-deal close of Rs10,460.
The transaction comprises a base deal of 600,000 shares or 30% of the capital. There is an upsize option of 150,000 shares (7.5%). Wendt will exit the company if all the shares are sold.
The institutional tranche opened for one day on Thursday and was subscribed 4.35 times, while the retail tranche was open for one day on Friday. HSBC is the sole bank on the transaction.
Above water
Foreign investors showed interest in all the transactions, bankers said, and the positive performances have been encouraging.
"India has historically traded at higher valuations to regional markets, and while valuations are still at a premium, that's not proving to be a deterrent. Global investors are still actively looking to allocate to India, particularly given its structural growth story and relative stability," Goldman's Soni said.
KFin shares ended at Rs1,041 on Thursday, above the issue price, Paytm at Rs857.20, Swiggy at Rs316.25, Aether at Rs756.60 and Wendt at Rs8,702.50.
Soni expects block activity to continue across sectors. "We're also seeing companies look to raise capital through primary issuance. IPOs may take longer to materialise as they require a more drawn-out process, but we expect them to make a meaningful return in the second half of the year."
Bankers said IPO issuers need to adjust their valuation expectations significantly to attract investors.
Automotive component maker Belrise Industries has taken the lead and launched a Rs21.5bn IPO with anchor books opening on May 20.
Solar pump manufacturer Oswal Pumps (Rs20bn) Anthem Biosciences (Rs34bn) and Schloss Bangalore (Rs50bn) are among the companies planning IPOs in the next couple of months.
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