ipo market: IPO boom is not a one-off event, says Axis Capital’s

2021 has been a bumper year for IPOs. Do you expect that to continue?
The past year has seen record IPO activity. Axis Capital has been at the forefront in ECM action in India. We managed 33 IPOs last year which is over 50% of all the IPOs that hit the markets in calendar 2021. However, I don’t see this as a one-off event. There are a number of trends that suggest that India’s capital market activity will remain healthy. We have seen retail investors play an important role in the public issues that we saw last year. The retail components of several public issues were subscribed on the first day of the issue. The growth in the number of demat accounts and a strong emerging equity culture explains their increased role. Mutual funds have had a sustained set of inflows in their SIP schemes.

Moreover, foreign investors continue to find India an attractive investment destination, as numerous businesses and supply chains look at alternatives apart from China. India has always had a strong entrepreneurial culture, which is very evident in this new digitally-enabled India, and the aspirations and capital needs of our entrepreneurs plus a strong consuming class is further attracting global capital. Interest rate increases and inflation will surely create some blips, but the overall exuberance is here to stay.

What are the some of the valuable lessons you are picking up from the way things have panned out?
There are some very interesting trends. It is particularly striking that private equity firms that struggled in India in late 2000s and early 2010s to exit their investments are now finding many opportunities. The scale of private equity investment in India has reached a new high, with over $60 billion of transactions recorded last year. Many of them were secondary deals which means that existing investors who financed the initial risk in a venture found takers for their investments with a new set of investors coming in to replace them. This was especially so in the technology space. This is a positive trend.

Moreover, we saw a number of companies backed by private equity firms tapping the IPO market. Many private equity investors found an exit or were able to pare their stakes and monetize investments through this route. Importantly, public market investors have been receptive to such offerings. And with successful…