In 2021, more than 20 Indian companies are planning IPOs to tap capital markets and adventurous sovereign investors are set to be major beneficiaries of the predicted bonanza.
Recent private equity fund-raising rounds have pointed to significant growth in value for sovereign investor shareholdings when companies plan to go public.
Shares of all the companies that went public over last year returned gains far over their issue price, mirroring the rebound in equities following the biggest slump in more than a decade caused by the lockdown.
Tech-driven companies are set to be at the forefront of the Indian IPO surge. All eyes are on Ola, the Indian rival to ride-hailing app Uber. Having bought a stake in April 2015, Singapore's GIC is set to more than triple its investment if Ola can achieve a valuation of US$8 billion at IPO stage. Stablemate Temasek should double its US$225 million investment of August 2018. Between 2014 and 2017, SoftBank Vision Fund (SV1) - backed by PIF and Mubadala - invested around US$900 million in the firm and should at least double its investment.
Temasek is set to raise at least 20% its investment in restaurant delivery business Zomato, which is set to value the company in excess of US$4 billion.
The world's second biggest edtech company Byju's is also lined up for an offering, which should provide the Qatar Investment Authority (QIA) with a return of over 30% within two years of investment in July 2019, if valuation targets are met. The Canada Pension Plan (CPP) is likely to make bigger gains, having invested at an earlier stage in late 2018.
SVF1 has been a significant backer of Indian venture capital, with its targets set to reach IPO stage in 2021. Among its acquisitions set to go to IPO stage are Policy Bazaar, in which it has a 15% stake and is set to earn a 130% growth in asset value when the fintech insurance company is floated. Temasek is also likely to be a winner in Policy Bazaar's public offering, having invested in the company's Series F round in July 2018.
SVF1 also backed Delhivery, acquiring a 23% stake in the tech-driven courier company, which could earn it a 86% yield in asset growth. With a stake of around 8%, CPP is likely to see similar growth in its US$115 million investment.
The Indian IPO bonanza is set to justify the aggressive venture capital in this burgeoning emerging market, when tech-related business is earning huge dividends in an increasingly digitalized market - in spite of the adverse impact of the Covid-19 pandemic on the Indian economy. However, much depends on the pace of India's vaccination programme, which would underpin broader economic confidence.
