Raising funds in India at strongest over next 2 years: BofA

Raising funds: Activity for raising funds in India will be at its strongest over the next two years, fuelled by conglomerates, tech firms and financial services providers scouting for capital to fuel growth, a senior official of Bank of America Corporation has said.

Owners of these ventures are using this opportunity to offload holdings, Debasish Purohit, co-head of investment banking in India told Bloomberg.   

Terming 2023 to be a year of block trades, Purohit said 2024 will be a year of public offerings, with the momentum spilling over into 2025. Both 2024 and 2025 will together be the busiest years of IPOs in our lifetime, he added. 

According to him, five to 10 companies in technology will launch their public offering, as a couple of multinational companies’ subsidiaries aim to go public in the two-year block. 

Notably, Mukesh Ambani’s Reliance Industries has been exploring an IPO listing for several years of its telecom arm Reliance Jio Infocomm, along with  Reliance Retail Ventures.

Tata Sons is also looking to list its financial services unit before 2025 after being classified as an 'upper-layer' NBFC (Non-Banking Financial Company) by the Reserve Bank of India.

Hyundai Motor Co. is also mulling listing its Indian business, in what is touted to be one of India’s biggest IPOs, as per a Bloomberg report earlier in February. 

The equity markets have been on an upmove with benchmark Sensex having risen over the past eight years. This incorporates a 19 per cent rally in 2023, with the retail investor base growing in India. A robust economy is conducive to public offerings, giving an exit to investors. 

According to the International Monetary Fund, India’s economy is expected to grow 6.5 per cent in 2024 and 2025. 

Parallelly, China is struggling to address ructions in its stock and property markets, as it also faces trade conflicts and several regulatory crackdowns. This encourages global investors to invest and move their money to India. 

All private equity funds one speaks to desire a China plus strategy, which gives way to at least two or three funds raised for India itself, Purohit said. 

A veteran, he has two decades of experience working in investment banking.

India should be seen as a standalone market, and not an extension of the wider Asia Pacific, Purohit said.

While Japan and South Korea are means of inbound deals in real estate, infrastructure, manufacturing and financial services, Taiwan sees investment in local semiconductor businesses, he said. 

Indian founders will partner with financial sponsors for growth expansion, as others eye an exit or sale of assets amid a consolidation of the sector or based on family decisions, Purohit said.

These are three or four broad areas which will attract M&A, he said, adding that if one gets 7 to 8 per cent of the fee pool, they are in a good place.