‘Pri­mary Mar­ket May be One Step Bet­ter than ’16’

The Economic Times - - Money -

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.

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