‘Primary Market May be One Step Better than ’16’
The primary market in 2017 will be better than last year with the average issue size getting bigger, said S Ramesh, managing director at Kotak Investment Banking. In an interview to Sanam Mirchandani on the sidelines of the Kotak investment conference, he said that while the IPO market will see better times, the QIP market will remain tepid due to lack of investment from the private sector. Edited excerpts:
CUTTING IPO TIMELINE
exchanges have been a darling of investors. You will see insurance companies coming to the market and there is also talk of some government IPOs happening. If things go well, primary market may be one step better than 2016. Last year 85% of IPOs were PE exits. That trend will continue. 2016 was a record year for advisory and M&A. I am optimistic that some more records will be broken in 2017 on the M&A front. We may be in for good vibrant capital markets and a good M&A environment in 2017.
Do you think the government will be able to meet its divestment target for FY18? This divestment target is now an ongoing programme. We should not look at it like a numbers game. There is a good probability they will achieve the targets they have set out for fiscal 2017-18.
Do you see start-ups and e-commerce firms tapping the market any time soon? We will see some M&A action in the start-up e-commerce space much more than what we have seen before. On listing in India, only one or Generally, the fee spread is rational in IPOs and better than 2007. There is not much undercutting. We are maturing towards a good IPO market where investors are applying their mind, intermediaries are being careful about the kind of companies they take to the market and the fee spreads are rational.
When could the QIP market revive? The QIP market is very tepid as not much of new investment is happening from the Indian private sector. I expect the same trend to continue except where companies have to deleverage or they are making an acquisition in a particular sector.