Block deals stage a comeback, defying IPO lull, volatility
Block deals are making a comeback, offering much-needed relief to India's equity capital markets amid an ongoing lull in initial public offerings (IPOs) and heightened volatility, according to experts.
In just the first 15 days of May, investors executed 12 block deals worth ₹3,541.97 crore compared with only five deals aggregating ₹506.37 crore in April, according to data from Prime Database.
Last week alone, nearly six large transactions took place; Antfin sold 4% stake in Paytm, General Atlantic divested 6.9% in KFin Technologies, and Singapore Telecommunications Ltd offloaded 1% stake to Bharti Airtel. Sajjan Jindal Family Trust also plans to sell shares worth up to ₹1,200 crore in JSW Infrastructure through a block deal in the coming days, according to media reports.
'This has been on account of a rebound in market sentiment and geopolitical de-escalation and supported by close to $3 billion in FII net inflows this quarter, along with steady DII participation, signaling renewed investor confidence," said Gaurav Sood, managing director and head, equity capital markets at Avendus Capital, an investment banking firm.
Also read | Sebi seeks to streamline QIP disclosures but experts flag legal hurdles
Global tailwinds are also contributing to this rebound. The US has dialled back aggressive tariff policies and is working to resolve trade tensions with its key partners.
'With the US now working to finalize trade treaties with its largest trade partners has eased this tension on the markets, which has been one of the factors that has led to a rebound in Indian equities," said Abhimanyu Bhattacharya, partner at Khaitan & Co., a law firm advising on ECM deals.
The expiry of lock-in periods for recently listed companies is expected to push more block trades into the market. Large investors may now look to encash stakes in startups and tech companies listed in 2023.
Recently listed online food delivery player Swiggy's six-month lock-in period for non-promoter, pre-IPO shareholders expired on 12 May.
Read this | From drought to revival: Are QIPs paving the way for new listings?
'The volume of IPOs last calendar year (~$20 billion) will see lock-up expiry, which will provide supply of block deal paper," said Mahesh Natarajan, managing director and head, ECM, Nomura. He added that several companies that adjusted their IPO sizes—both in the primary and secondary markets—are likely to return to the market once their lock-in periods end.
Bankers believe block trades act as leading indicators of a broader revival in ECM activity.
Block deals are faster to execute, offer immediate liquidity, and provide clear pricing—especially when there is strong institutional interest. In comparison, IPOs demand deeper investor scrutiny and have seen lukewarm traction in recent times. Qualified institutional placements (QIPs), on the other hand, remain a flexible tool as they are largely opportunistic and driven by company-specific funding requirements.
'Unlike block trades, IPOs/QIPs typically have a slightly longer lead time due to regulatory requirements," explained Chirag Negandhi, MD, JM Financial. With the recent market uptick, he anticipates a wave of ECM launches to gain traction.
Also read | QIPs by state-owned banks: A push for compliance but little upside for investors
Since its September peak till the end of April, the Nifty 50 has slipped 7%. Meanwhile, the market's fear gauge-India VIX-has surged 52%, signalling a sharp rise in market volatility and investor unease. Since the beginning of May, Nifty 50 has recovered 3% of those losses and is now down 4.6% since the September peak.
Owing to the volatility, over the past quarter IPO activity has slowed even as a number of companies have taken steps for a public listing in the near term.
Since then, the public markets have seen some recovery. Law firms advising on capital market deals say IPO and QIP pipelines remain soft, but strong block deal momentum could turn the tide if markets stay stable over the next few months.
'The other segments, including IPOs and QIPs, have been slower over the last few months due to the correction in the market. If there is an upward movement and stability demonstrated, all ECM categories may eventually see upward traction," said Birbahadur Sachar, partner, JSA Advocates & Solicitors.
Read this | FII game plan: Sell stocks for profit, bet on IPOs, discounted QIPs, block deals
Amit Ramchandani, managing director and chief executive officer, investment banking, Motilal Oswal Financial Services, believes, 'Block deals increase after companies declare results as many of these deals are done by insiders who are prohibited to sell the stock after quarter end till declaration of results".
He added that key concerns—whether related to Pakistan, tariffs, or foreign investment flows—have now been addressed. And with strong scale and growth potential, India is well-positioned to attract capital.
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