JPMorgan sees India share sale boom reaching $30 billion in 2024 India will see at least $30 billion raised annually through primary and secondary share sales in 2024 and in the years to come, as companies and their shareholders are more willing to tap the market for funding, according to JPMorgan Chase & Co. Sales of additional shares in listed companies in the country have surpassed $10 billion this year, more than the tally for all of 2022, according to data compiled by Bloomberg. The momentum can sustain into next year and beyond as owners of Indian companies are keen to raise funds for other investments, said Abhinav Bharti, India head of equity capital markets at JPMorgan. Demand from local asset managers as well as foreign investors is also driving share sales, he added. JPMorgan is the top manager of equity and rights offerings in India in the first eight months of 2023, according to data compiled by Bloomberg League Tables. The American bank has a market share of nearly 15%, followed by Kotak Mahindra Bank Ltd., which has an 11% share of the market. In contrast to block trades, India’s IPO activity has slowed down significantly this year, tracking a global slump in dealmaking. Companies have raised about $3.2 billion through first-time share sales so far in 2023, down from $5.5 billion for the same period last year, data compiled by Bloomberg shows. There haven’t been any $1 billion IPOs since Life Insurance Corp. of India’s $2.7 billion listing in May 2022. A couple of $1 billion-plus IPOs could return to India after the country’s federal elections between April and May, Bharti said. The banker expects bigger IPOs to come from sectors such as consumer, technology and financial services. Strong corporate earnings and robust economic growth are drawing investors even as they flee other Asian emerging markets. China’s currency has plunged amid concerns over the once fast-growing nation’s precarious economic outlook and geopolitical tensions. “Because of recent softness in Chinese economic data, a lot of these global EM fund managers are underweight on China and now where you go and deploy that extra capital, you must have a counter overweight as well,” Bharti said. “India is benefiting from that.”
The Japanese pharma major is also filing a plea before the Delhi HC seeking appointment of forensic auditors to analyse transactions involving IHH, Fortis Healthcare and RHT, Singapore, as directed by the HC on October 18.
The development is likely to create legal hurdles and delay the proposed open offer as IHH had recently told FE that it could only go ahead if Sebi agreed with its legal interpretation that the SC’s September 22 order has lifted all such restraints.
IHH managing director and CEO Kelvin Loh told FE on November 9 that the company would like to go ahead with the open offer “as soon as possible” as there has already been a delay of four years. Ravi Rajagopal, chairman of Fortis Healthcare, had added that their legal counsel has advised that the company can go ahead with the open offer as the SC order has disposed of various appeals, including the suo motu contempt. “We have represented to the Sebi and the matter is with them,” Rajagopal had said.
However, legal observers told FE that the matter is not that straightforward and simple as the Delhi HC has to take the final call on the matter of open offer as well as whether a forensic audit has to be done in the share sale which was executed in 2018.
Also Read: IHH to float open offer for Fortis if Sebi concurs with our legal view: MD & CEO
Loh and Rajagopal had said the possibility that the matter may take a different turn when it comes up in Delhi HC cannot be ruled out.
IHH had in July 2018 acquired a 31% stake in Fortis Healthcare for Rs 4,000 crore through the bidding route. It had also earmarked Rs 3,000 crore to make an open offer for an additional 26% to the public shareholders as required under the law.
Daiichi has written to Sebi that the SC in its September 22 order had asked the HC to consider ordering a forensic audit into the dilution of FHL shareholding, repeated violation of undertakings and assurance by former FHL promoters — Malvinder and Shivinder Singh — and the transaction between FHL, IHH and the clandestine transfer of Rs 4,666 crore to RHT Singapore.
Daiichi is “severely prejudiced” with IHH’s clandestine attempt to subvert the status quo order directed by the SC on December 14, 2018, and September 22 with respect to the conduct of forensic audit and the pending proceedings before the HC by purportedly consulting regulatory authorities, including Sebi, on the proposed FHL-IHH transaction. It has reiterated that the FHL-IHH transaction was currently sub-judice before the HC where FHL is also a party, its solicitors, P&A Law Offices, have said in the letter.
“We further state that any such attempt by FHL and/or IHH to proceed with the FHH-IHH transaction would be in direct contravention of the HC and SC orders,” the letter sent by the law firm has stated. Daiichi Sankyo is pursuing the enforcement of Rs 3,500-crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information when they sold Ranbaxy Laboratories to it for $4.6 billion in 2008. The apex court had in 2018 put on hold the sale of Fortis Healthcare to IHH on a contempt plea filed by the Japanese drugmaker against the Singh brothers.