Multi-Billion Dollar IPOs Are Popping Up in India

(Bloomberg) -- India is gearing up for what could potentially be a slew of mega initial public offerings.

Prime Minister Narendra Modi’s government surprised investors on Saturday by saying it will sell part of its stake in state-run behemoth Life Insurance Corp. of India to meet its record asset-sale target. The jumbo sale could fetch the government between 850 billion rupees ($11.9 billion) and 900 billion rupees if it gets done this year, Credit Suisse Group AG analysts led by Neelkanth Mishra wrote in a note.

Meanwhile, Sameer Kalra, a strategist at Target Investing, estimates the IPO to be valued between 910 billion rupees and 1.01 trillion rupees, given an average 12-month forward price-to-earnings ratio of 30 to 35 times. “That is the range in which all the life insurance companies got listed,” he said.

A first-time share sale of that size would be the biggest India has ever seen and could create the nation’s most-valuable company by market value. The nation’s largest transaction to date was Coal India Ltd.’s $3.4 billion float a decade ago, data compiled by Bloomberg show.

No Appetite

Of course, the LIC IPO faces a number of hurdles, from timing to its sheer size. The government will have to amend the special law under which the insurer was set up in 1956, and secure a buy-in from the employees’ union as part of preparations for the mega share sale.

While everything depends on the government’s execution, investors don’t have the appetite for such a big issuance at the moment, said Deven Choksey, managing director at KR Choksey, a Mumbai-based wealth manager. Assuming that the government raises 400 billion rupees, that will represent a 5% dilution, he added.

Meanwhile, another big deal is also lining up: Tower Infrastructure Trust, the investment trust that manages the mobile-phone tower business of Reliance Industries Ltd., filed last week for a first-time sale of as much as $3.5 billion. Canadian asset manager Brookfield Asset Management Inc. has a stake in the trust.

Also read: Brookfield to Invest $3.7 Billion in Reliance’s Tower Assets

Excluding the potential float of LIC, Tower Infrastructure Trust stands to be the largest Indian IPO on record, data compiled by Bloomberg show. The last time the nation saw deals surpassing $1 billion was in 2017, when a slew of insurance companies went public, including SBI Life Insurance Co. and General Insurance Corp. of India.

More imminently, SBI Cards and Payment Services is expected to launch an IPO that could raise more than $1 billion as early as this month, IFR reported. Last year, Embassy Office Parks REIT’s $689 million sale was the nation’s biggest, and companies raised just $2.87 billion in total through new share offerings, the data show.

UPCOMING LISTINGS:

• Central Retail
  • Thailand stock exchange
  • Size up to $2.6b
  • Books close Feb. 3, listing Feb. 20
  • Bualuang Securities, Phatra Securities, Credit Suisse, Morgan Stanley, UBS
• Lion Air
  • Indonesia stock exchange
  • Size over $500m
  • Pre-marketing Jan. 27-Feb. 7
  • BNP Paribas, Morgan Stanley
• Elite Commercial REIT
  • Singapore stock exchange
  • Size up to $170.3m
  • Listing Feb. 6
  • OCBC, UBS, CGS-CIMB, CICC
• Champ Resto Indonesia
  • Indonesia stock exchange
  • Size about $150m
  • Pre-marketing started Jan. 31
  • CLSA
• Shenzhen Leoking Environmental Group
  • Hong Kong exchange
  • Pre-marketing started Dec. 18
  • CLSA sole sponsor
• Mr D.I.Y Group
  • Bursa Malaysia
  • Size up to $500m
  • Pricing date TBD
  • CIMB, Maybank

• Gongniu Group

  • Shanghai exchange
  • Size $519m
  • Listing TBA
  • Sinolink Securities

More ECM situations we are following:

• The world’s top IPO market is seeing the impact of the novel coronavirus outbreak: a Chinese biotech firm decided to postpone investor meetings for its Hong Kong listing.
• ITI Ltd. extended the closing date of its follow-on share sale for a second time as the Indian telecom-equipment maker received bids for a little more than half the shares on offer.

SEE ALSO:

• Asia ECM Weekly Agenda
• IPO data
• U.S. ECM Watch
• Europe ECM Watch
• To receive the ECM Watch in your inbox daily, click the “subscribe” button at the top of this article

--With assistance from Ishika Mookerjee.

To contact the reporters on this story: Julia Fioretti in Hong Kong at jfioretti4@bloomberg.net;Abhishek Vishnoi in Singapore at avishnoi4@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Cecile Vannucci, Ravil Shirodkar

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