India's IPO market loses steam on global market jitters
By Vivek Kumar M and Shivani Tanna
(Reuters) -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 U.S. 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, 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.
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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.
($1 = 84.3430 Indian rupees)
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