To Improve Investors Portfolio Returns
Lohit Bharambe along with Smriti Sahu bring on the table some interesting observations on the IPO markets in 2017 and explain why it makes sense to invest in IPOS from a strategic perspective.
IPO MARKET IN 2017
What a year 2017 has been for IPO so far. The beauty of the IPO markets in 2017 has been the numerous quality issues rewarding the shareholders,thus boosting investor sentiments.
Actually, healthy IPO market has been a global phenomenon if we consider H1FY17. Improved economic fundamentals in developed economies has been instrumental for healthy IPO markets leading to impressive build-up of IPO pipelines.
As majority of global markets touched record highs in H1 of 2017, the global IPO markets have not made the headlines yet. With brightened investor sentiments and positive global outlook the positive momentum in the first half of 2017 is expected to continue in second half of 2017 as well.
The year 2016 was a good year for the IPO markets not only in India but globally as well. For Indian markets, the year 2017 promises to surpass the IPO market performance of 2016 on all metrics, including the number of issues and the sizes of issuances.
The equity indices trending upwards with low volatility has been the highlight of the year 2017 so far. The same can be said about the global equity indices as well. Ample liquidity backed by improving fundamentals in most markets were instrumental in impressive performance of IPO markets in 2017.
The first half of 2017 for the IPO market has been most active since the H12007 globally. In India as well, the IPOS in the first half have already surpassed the total issue sizes for FY15 and FY14 put together. To be fair only 6 companies hit the primary market in 2014 and 21 companies got listed in FY15. The years 2014 & 2015 will not be remembered as active years for the primary markets.
However, if we compare the issue sizes in H12017 with H12016, the IPO market has shown a growth of almost 93 per cent if we consider the data till June
2017. So far in 2017, 16 companies have hit the primary markets and have managed to raise ₹14,521.60 crore. With a promising pipeline of IPOS slated to hit the primary markets in 2H2017, the year 2017 promises to keep investors busy.
If we compare the performance with the peak years for IPO markets such as 2007 and 2008, the performance in 2017 stands impressive. Already in H12017, the money raised is equal to nearly 80 per cent of the total money raised for FY2008. However, the total money raised in H12017 stands at a paltry 33.5 per cent of the total money raised in FY2007.
We can safely say that the IPO market performance in 2017 is one of the best performances since 2007,i.e. since last 10 years.