Tag: ipos

MPC meet, Omicron and IPO buzz among key factors to drive market this week, BFSI News, ET BFSI

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New Delhi: Domestic equity markets ended the volatile week with modest gains, but kept the market participants on their toes. Despite the supportive GDP numbers, the new Covid-19 variant spoiled the party for equities.

Benchmark indices – Nifty50 and BSE Sensex – ended the week with gains of a per cent each, whereas the broader markets were in tandem, rising a per cent.

Amidst the wild swings, traders took refuge in the IT stocks, whose index rose about 4 per cent during the week.

“We reiterate our cautious stance given the uncertainty surrounding the new variant. Among the sectors, the IT pack looks firm while others are showing a mixed trend. Traders should continue with hedged trades and maintain positions on both sides,” said Ajit Mishra, VP-Research, Religare Broking.

Below are the factors that may help steer the markets next week:

RBI MPC meet
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is scheduled to meet between December 6-8. The committee will meet amidst the rising inflationary pressure and the scare of Omicron. It is expected that RBI will keep the rates on hold and markets would keenly watch the commentary of the RBI governor.

Omicron Scare
The rise of new coronavirus variants has spooked the traders globally, amidst the rising fear of a halt in economic activities. According to the World Health Organisation, the new variant is less lethal but likely to spread at a higher speed. Any jitter to normalcy or curbs on the movement are likely to dampen the sentiments further.

Fed‘s Stance
The sudden hawkish stance from Fed’s chair Jerome Powell has sent a clear signal to the market that combating the historic rise in inflation is the prime priority of the central bank. The two-year-long measure to boost demand and employment is likely to be gone and liquidity may be sucked out of the economy.

During two days of testimony in the week gone by, Powell acknowledged the emergence of the Omicron variant, which is a potential risk to economic growth.

Macroeconomic Data: India will release its macro-economic data, including factory manufacturing output and India Industrial Output (IIP) for October and CPI inflation for November on Friday.

Buzz in IPO mart
It will be raining IPOs next week on Dalal Street as four companies, namely RateGain Travel Technologies, Shriram Properties, CE Info Systems (MapmyIndia) and a Rakesh Jhunjhunwala-backed company Metro Brands will hit the primary markets.

Star Health Listing
Dalal Street will witness the listing of another Rakesh Jhunjhunwala backed Star Health and Allied Insurance Company, whose issue fell flat on Dalal Street. The issue was subscribed merely 79 per cent, forcing merchant bankers to trim OFS size to get the issue sail through. The company’s issue was open between November 30 and December 2.

US Jobless Claims
Global economic indicators such as US jobless claims would also be keenly watched after the recent volatility in the global equities this past week. The initial jobless claims would be on the radar of market participants, guiding the future course of action.

Technical Outlook
After a big bearish candle in the last week, the Nifty 50 index closed positive as compared to the last week, and is trading around the support of 20 EMA on the weekly chart, said Yesha Shah, Head of Equity Research, Samco Securities.

“The correction witnessed has done notable damage to the ongoing momentum, Nifty continues to trade below its rising trend line which had been supporting the uptrend thus far. Traders are advised to maintain a cautious to mildly bullish outlook and to maintain a strict stop loss below the 16,850 level,” she added.



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Bank deposits contract in the post Diwali fortnight, BFSI News, ET BFSI

Banking & Finance

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Banks deposits contracted by over a lakh crore in the post Diwali fortnight as investors applied in huge amounts for the big ticket IPOs lined up during the fortnight ended November 19

Aggregate deposits in the banking system dipped Rs 2.67 lakh crore during the fortnight ended November 19 to Rs 157.8 lakh crore, latest RBI data indicates. Both demand and term deposits contracted sharply during the fortnight by Rs 1.52 lakh crore and Rs 2.67 crore respectively.

Analysts attribute this largely to investors using the money parked in banks to apply for many big ticket IPOs during the fortnight. These included PayTM, Sapphire Foods and paisabazar.com among others. “The sharp contraction in deposits during the fortnight is probably driven by withdrawal for IPOs ” said an economist with a foreign bank. “There was a big jump in deposits in the previous fortnight.”

But on a long-term basis deposits continue to post a strong growth despite banks lowering interest rates earned on them. Weighted average term deposit rates have fallen by over 50 basis points-bps over the last one year. Yet, the year-on-year deposit growth is 9.8 per cent as of November 19, as bank deposits continue to be a risk free avenue of investment for savers. It is reckoned that bank deposits account for nearly half of household financial savings in India as they have been typically risk averse. But this mind-set is slowly changing, experts say.

As for credit, there was a modest pick-up of Rs 1,158 core during the fortnight. But on a long-term basis, banks are seeing a pick-up in loan demand as economic activity picks up following easing of lockdown induced restrictions. On a year-on-year basis, credit growth worked out to 6.9 per cent as of November 19, compared to less than 6 per cent a few years ago.

As per the latest data on sectoral deployment of bank credit, loans to large corporates rose 0.5 per cent (on a year-on-year basis) to Rs 22.7 lakh crore in October compared to a contraction of 1.8 per cent a year ago. All major segments except services including agriculture, industry and retail posted higher growth rates over previous year.



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Small finance banks, microlenders stay away from IPO party, BFSI News, ET BFSI

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Kolkata: While Nykaa, Paytm and Policybazaar are the toast of the primary equity market now, lenders to the bottom of the pyramid which had earlier lured investors for their capacity to earn high margins remain laggards.

Half-a-dozen entities in the small finance bank and microfinance space that have received approval for raising funds through initial public offerings appear to be going slow because of valuation issues, people familiar with the matter said.

Among small finance banks, ESAF, Jana, Fincare and Utkarsh are said to be weighing investor interest for their proposed IPOs. Utkarsh Small Finance Bank received Securities & Exchange Board of India’s approval for IPO in June, Jana SFB got it in July and Fincare in August. ESAF Small Finance Bank received the regulator’s approval in October for the second time, after the one-year validity on the first lapsed in March.

Microfinance firm Arohan Financial Services received Sebi approval in April but has yet to hit the market. Northern Arc Capital, a non-bank lender with exposure to the financial inclusion space, got the approval in September.

“Many Lenders including those in the microfinance industry are not getting the kind of investor interest or valuation seen for primary issues of fintech firms,” said Donald D’Souza, managing director & co-head (investment banking) at Equirus.

“Some of these firms have done a few roadshows but have failed to attract investors at higher valuation. That’s the reason why some of these lenders are not seen in the IPO market despite the bull run. Even some small finance banks, which need to be listed within a specified time frame to meet regulations, are yet to be seen in this space,” D’Souza said.

Investors are apparently exercising caution as micro lenders are saddled with concerns over asset quality, high credit cost and squeezed margin following the pandemic-led stress on their borrowers.

The portfolio at risk for 30 days (PAR30+) for the microfinance sector remained high at 10.18% at the end of September, even after showing a sharp improvement from 16.56% three months earlier.

“The new-age companies are mostly making merry in the season of IPOs since investors are ready to pay huge premiums for new business models and fresh ideas. The party is on at least till Christmas. The valuations however are relatively muted for lending companies as investors are comparing them with the existing secondary market prices in the same segment,” said Dinesh Arora, partner and leader (deals) at PwC India.

As many as 52 companies have mobilised Rs 1.08 lakh crore from primary issuances in 2021 so far compared with Rs 26,600 crore raised by 15 companies last year. Foreign portfolio investors are said to have invested more than Rs 46,000 crore in IPOs this year.

Microfinance association Sa-Dhan said the average collection efficiency has increased to more than 95% in the quarter through September from 85% in the preceding quarter, even as 13 states and union territories including Chhattisgarh, Kerala, Tamil Nadu and West Bengal have their PAR30+ value higher than the industry average.



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Small finance banks, microlenders stay away from IPO party, BFSI News, ET BFSI

Banking & Finance

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Kolkata: While Nykaa, Paytm and Policybazaar are the toast of the primary equity market now, lenders to the bottom of the pyramid which had earlier lured investors for their capacity to earn high margins remain laggards.

Half-a-dozen entities in the small finance bank and microfinance space that have received approval for raising funds through initial public offerings appear to be going slow because of valuation issues, people familiar with the matter said.

Among small finance banks, ESAF, Jana, Fincare and Utkarsh are said to be weighing investor interest for their proposed IPOs. Utkarsh Small Finance Bank received Securities & Exchange Board of India’s approval for IPO in June, Jana SFB got it in July and Fincare in August. ESAF Small Finance Bank received the regulator’s approval in October for the second time, after the one-year validity on the first lapsed in March.

Microfinance firm Arohan Financial Services received Sebi approval in April but has yet to hit the market. Northern Arc Capital, a non-bank lender with exposure to the financial inclusion space, got the approval in September.

“Many Lenders including those in the microfinance industry are not getting the kind of investor interest or valuation seen for primary issues of fintech firms,” said Donald D’Souza, managing director & co-head (investment banking) at Equirus.

“Some of these firms have done a few roadshows but have failed to attract investors at higher valuation. That’s the reason why some of these lenders are not seen in the IPO market despite the bull run. Even some small finance banks, which need to be listed within a specified time frame to meet regulations, are yet to be seen in this space,” D’Souza said.

Investors are apparently exercising caution as micro lenders are saddled with concerns over asset quality, high credit cost and squeezed margin following the pandemic-led stress on their borrowers.

The portfolio at risk for 30 days (PAR30+) for the microfinance sector remained high at 10.18% at the end of September, even after showing a sharp improvement from 16.56% three months earlier.

“The new-age companies are mostly making merry in the season of IPOs since investors are ready to pay huge premiums for new business models and fresh ideas. The party is on at least till Christmas. The valuations however are relatively muted for lending companies as investors are comparing them with the existing secondary market prices in the same segment,” said Dinesh Arora, partner and leader (deals) at PwC India.

As many as 52 companies have mobilised Rs 1.08 lakh crore from primary issuances in 2021 so far compared with Rs 26,600 crore raised by 15 companies last year. Foreign portfolio investors are said to have invested more than Rs 46,000 crore in IPOs this year.

Microfinance association Sa-Dhan said the average collection efficiency has increased to more than 95% in the quarter through September from 85% in the preceding quarter, even as 13 states and union territories including Chhattisgarh, Kerala, Tamil Nadu and West Bengal have their PAR30+ value higher than the industry average.



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Jul-Sep clocks record 597 deals worth $30 billion, shows Grant Thornton data, BFSI News, ET BFSI

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A total of 597 deals, amounting to $30 billion, were reported in Jul-Sep, reflecting the upbeat market sentiments, according to Grant Thornton Bharat Dealtracker.

The quarter also witnessed the highest number of IPO issues in over a decade, with 18 issues amounting to $5 billion. There has been an 86% increase in deals, compared with a year ago amid the subsiding COVID-19 and rise in daily inoculations.

The sustained economic growth is due to the rapid expansion in the services sector and accelerated manufacturing activities.

Mergers and acquisitions

M&A deals were valued at $12.8 billion for Jul-Sep, a 10% fall compared with a year ago. The dip in deal values was due to the absence of high-value deals.

The IT sector dominated the M&A deal values, followed by banking and financial services, of which two major deals accounted for over 52% of the total M&A values in Jul-Sep.

These were PayU‘s acquisition of Billdesk for $4.7 billion and Sumitomo Mitsui Financial Group‘s acquisition of Fullerton India Credit Company for an estimated $2 billion.

Private equity

PE deals witnessed a robust growth in Jul-Sep, with an all-time high deal activity in volumes and values at $17.1 billion, across 486 investment rounds. Startups claimed a major share in deal volumes at 64%, according to the report.

Both volumes and values saw twice the increase compared with Jul-Sep last year. Compared with the previous quarter, volumes were up by 44% and values saw a strong 24% growth.

Startups claimed a major share in deal volumes at 64%, while e-commerce led in deal values with 30% share, followed by IT, banking, telecom, and others.

IPOs and QIPs

Despite the impact of the COVID-19 pandemic, the country witnessed a record number of IPOs this year , with 42 issues amounting to $10.3 billion.

Jul-Sep recorded the highest number of issues in any given quarter, since 2011, with 18 issues amounting to $5 billion. The quarter saw only seven QIP fundraises, reflecting a trend reversal in 2021, compared with 2020 when QIPs dominated the market, the report said.



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‘Accounting background made me a better investor’

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After a long stint of 24 years at Reliance MF, Sunil Singhania, in 2018, joined the start-up bandwagon. Thus was born Abakkus, which offers various products for HNIs across its AIF and PMS platforms. Having dabbled in markets for close to three decades now, Singhania, a CA rankholder and a CFA charterholder, has a vantage point that very few market gurus offer today. In an interview with BL Portfolio, he shares his personal finance philosophies, investment approach and experience, for the benefit of readers.

What does money mean to you?

‘Money is not everything’ is a cliched statement and may be, to an extent, it is true. However, we are in a materialistic world and for our needs and comforts, we do need to have adequate money. It is also a reflection, to some extent, of the fact that you are professionally doing things right. While making it is a satisfaction, bigger satisfaction should also come from utilising it aptly.

Looking back, you completed CA when you were 20 years old and were a top rankholder then. But instead of taking up job offers, you practised CA. Did being a CA make you take investing more seriously?

Having got an All-India rank, I did receive a lot of job offers from prominent corporates. However, I wanted to pursue my passion of being away from routine auditing, accounts, etc, that large companies were offering. Having my own practice enabled me to learn about entrepreneurship early in my career and it also made my foundation on accounting principles, taxation and balance sheet reading very strong. These surely aroused my interest in equity investing and also helped me to be a better investor.

At the beginning of your investing experience, you were known to have made a big profit in IPO investment of Gujarat Godrej Innovative Chemicals. For the retail investor, how is the IPO market of 80-90s different from today?

Rules have changed a lot. In earlier days, there was CCI that used to determine the premium a company could charge at the time of IPOs. Thus, they were offered at a big discount to their intrinsic value. Also, size of the IPOs should be smaller. Now, it’s a free market and companies can determine themselves the price at which they want to raise funds during an IPO. There are many interesting companies that are tapping the markets via IPOs, but my view is that there is definitely exuberance in this segment of the markets and one surely has to be careful about many of these IPOs, not because of quality or fundamentals, but purely based on the price that they are being offered at.

Being a fund manager, do you follow the same guiding principles when you invest for yourself as well as for your clients?

Investing is the same and the principles an investor follows are the same. While managing money for others, one is in a role of trusteeship and therefore it is more difficult. One has to be careful about risks as well as perception and also has to take care of near-term performance while investing for longer term.

What are the goals that drive you today?

An important aspect of equity investing is “Being Positive”. Our investment decisions are based on the optimism that India will continue to grow rapidly and therefore, returns will be good. At the same time, one has to be realistic about return expectations. From our side, the thought is that we should, on a risk return basis, do better than the benchmark indices.

Also, India is a country that thrives and grows because of entrepreneurship. we have thousands of passionate promoters and businessmen and new segments and businesses coming up. These offer investment opportunities as also creating alpha. In-house and extensive research is our mantra and long-term wealth creation for all involved is our goal.

What does your personal portfolio look like? What are the lessons you have learnt from the way you have handled it?

Ever since I turned an entrepreneur with the setting up of Abakkus, a large part of my investments is in Abakkus and its funds. I have some direct equity, predominantly in very small market cap companies as well as some in private companies. I do have some exposure to debt. I have realised that I end up ignoring my personal investments as full attention is in excelling while managing client investments at Abakkus. The biggest lesson is to let investments grow in a country like India that is visibly growing the fastest in the world.

What has been your most successful investment till date? What are the contributing factors?

Very tough to pinpoint. I have had multiple successes and many that have lost money. Of late, we were early to see the digital trend and some of our bets on the listed side in this space has done very well and contributed to very good returns for our investors. I believe that some of the new trends like digital, efficiency, renewables, environment, etc have huge multi-year potential. However, its not easy to find many stocks that are exactly under priced here.

You have seen an era when getting balance sheets was tough to today when a lot of the financial information about companies is easily available. There is an overload of information as well. How do you sift the wheat from the chaff today?

Data is available easily in this digital world. This has led to more transparency and many more analysts are now seriously analysing companies more extensively. Time commitment has surely increased. From our side, a combination of a large analyst team, multiple company meetings, interaction with sell-side analysts and being passionate and charged up every single day, is what helps. I personally read a lot, including balance sheets and this history of past meetings and company behaviour in different cycles also helps.

What are the all-season investing lessons that investors should remember?

A bull market is followed by a bear market which is followed by a bull market — this is what Sir John Templeton said. If you are an investor in a growing country like India, decent returns and wealth will surely be made over a period of time.

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Bankers see risk in chase for commercial papers, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: Availability of cheap funds in the money markets through commercial papers is prompting financial intermediaries to arbitrage and chase higher returns. While broking firms are raising funds for funding of initial public offers (IPOs), bankers fear that the money might find a way into riskier assets.

The surplus liquidity in the money market has resulted in the heightened issuance of commercial papers. The average monthly outstanding during the first half of the current financial year has been over Rs 4 lakh crore. However, according to bankers, concerns are emerging on the nature of issuers with some borrowing at high rates.

Commercial papers, although debt instruments like bonds, are for very short tenures (usually three months), because of which issuers can get better ratings than they would for longer-term bonds. These are issued by corporates as well as finance companies and, in recent times, mutual funds have turned out to be major investors in this segment.The share of non-banking financial companies (NBFCs) in total commercial paper issuances increased to 43.2% in H1 of 2021-22 from 21.9% in the corresponding period of the previous year, while that of corporates moderated to 46.2% from 64.9% over the same period. Top-rated borrowers can raise funds at close to the reverse repo rate of 3.35%, which is the rate at which banks lend to the RBI. However, yield-chasing fund managers make small investments in high-yield papers and there have been outlier issuers at 12-13% as well.

According to bankers, there is a likelihood that the availability of cheap funds might prompt some intermediaries to arbitrate with more risky investments such as stressed assets. Although companies dealing in stressed assets do not borrow directly from money markets, they can raise money through intermediaries who have access.

Last month, SBI chairman Dinesh Khara said that the drop in credit deposit ratio has resulted in the mispricing of credit risk by banks. “There is a temptation on the part of lenders to go down the risk curve and misprice the risk. We are starting to see this,” he said. While bank deposits rose 3.2% to Rs 156 lakh crore in FY22 up to September 24, advances grew only 0.1% to Rs 109.5 lakh crore in the same period.

The RBI’s monetary policy report noted that commercial paper issuances increased to Rs 10.1 lakh crore during H1 2021-22 from Rs 7.9 lakh crore in H1FY21. Their rates were on an average 46 basis points (100bps = 1 percentage point) higher than the repo rate. However, the yields have risen due to increased issuances by NBFCs, partly to mobilise resources for investment in IPOs, but moderated subsequently, the report said.



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Goldman Sachs, BFSI News, ET BFSI

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Mumbai: New initial public offerings (IPOs) will help add $400 billion to the overall market capitalisation over the next three years, an American brokerage said on Monday. The estimate comes on the back of a surge in IPO activity in the last few months, which has seen companies raise $10 billion from public markets since the beginning of the year — higher than the money raised in the three years prior to that, Goldman Sachs said.

“We expect the IPO pipeline to remain robust over the next 12-24 months, based on recent announcements from ‘new economy’ unicorns and our objective framework for estimating new listings,” it said.

The number of such ‘unicorns’, which are companies having a valuation of $1 and above, has surged in India in recent years, enabled by the rise of the internet ecosystem, availability of private capital and favourable regulatory environment, it said.

“We estimate nearly $400 billion of market cap could be added from new IPOs over the next 2-3 years. India’s market cap could increase from $3.5 trillion currently to over $5 trillion by 2024, making it the 5th largest market by capitalization,” it said.

Last week, India surpassed France to be the country with the sixth highest market capitalisation.

At present, Indian equity indices are among the ‘oldest’ in the region with the average listing age exceeding 20 years and dominated by old-economy sectors.

However, as the large digital IPOs get included, the new economy sector’s exposure could rise from 5 per cent to 12 per cent (at 50 per cent float) and 16 per cent (full inclusion) over the next 2-3 years, it said.

Among the companies which have debuted on the stock markets is Zomato, while others like the fintech player Paytm are in the fray.

While Indian equities have done well this year (trading 26 per cent up since January), being the best performing market regionally has prompted overheating concerns, the brokerage said, but added that it is overweight on expectations of a strong cyclical recovery and supportive flows.

Additionally, the strong thematic appeal and growth potential of the new economy sectors lend support to the medium-term view.

“Investors can find attractive return opportunities, as long as they don’t overpay for growth, as evidenced by significant outperformance of China’s new economy stocks over the past decade. Financial intermediaries may have substantial revenue opportunities from growth in issuance-related activities,” it added.



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MOVES-Goldman hires Citi banker as co-head of investment banking in MENA

Banking & Finance

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DUBAI, Sept 5 – Goldman Sachs has hired senior Citigroup banker Jassim AlSane as its co-head of investment banking in the Middle East and North Africa region, according to two sources familiar with the matter.

AlSane, a Kuwaiti national, has spent 13 years with Citi where he has most recently been managing director in its investment banking unit, focusing on mostly Abu Dhabi and Kuwait, one of the sources said.

Goldman has also hired Omar AlZaim from HSBC as head of investment banking for Saudi Arabia, one of the sources said.

Goldman Sachs and HSBC did not immediately respond to requests for comment. Citi declined to comment.

Bloomberg reported the news of the appointments earlier on Sunday.

Goldman Sachs has been pushing to win deals in Saudi Arabia and Abu Dhabi, where initial public offerings (IPOs) and mergers and acquisitions are on the up.

It landed a lead role https://www.reuters.com/world/middle-east/abu-dhabis-adnoc-adds-goldman-sachs-lead-banks-drilling-ipo-sources-2021-07-01 in the IPO of ADNOC’s drilling unit, sources said in July, in it first such high-profile deal in the emirate since 2019.

Goldman’s investment banking unit was sidelined from any new business from Abu Dhabi more than two years ago after state fund Mubadala’s subsidiary filed a lawsuit against it to recover losses suffered through its dealings with Malaysia’s fund 1MDB.

The lawsuit was dropped last year.

In Saudi Arabia, Goldman is advising on the sale of Saudi Aramco’s gas pipelines stake sale and previously worked on Aramco’s IPO. (Reporting by Davide Barbuscia and Saeed Azhar; Editing by Pravin Char)



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Overlooked IPO markets suddenly booming as China deals slow, BFSI News, ET BFSI

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China’s crackdown on technology companies is prompting global investors to look for new opportunities across Asia, contributing to a record jump in initial public offerings from India to South Korea that shows few signs of slowing.
Tech companies from those two countries and Southeast Asia have raised $8 billion from first-time share sales this year, already blowing past the previous annual peak. The tally is poised to get bigger with planned listings by companies including Indian fintech giant Paytm and Indonesian internet conglomerate GoTo, both of which may break local fundraising records.

Long overshadowed by their Chinese peers, this new crop of startups is coming of age just as Beijing’s clampdown puts a damper on listing and growth prospects in what had long been the region’s hottest IPO market.

The result, some bankers say, may be the start of a new era for tech listings in Asia. Investors are already boosting exposure to markets outside China, with some buying into IPOs from countries like India and Indonesia for the first time. Prospective issuers that historically benchmarked themselves against Chinese companies are now highlighting similarities to other global peers in hopes of attaining higher valuations.

“These are strong companies and stories in their own right, but the overwhelming demand has been enhanced by rotation away from China tech,” said Udhay Furtado, co-head of Asia equity capital markets at Citigroup Inc.

China’s regulatory onslaught, now in its 10th month since the shock implosion of Ant Group Co.’s IPO, has slashed valuations for the nation’s listed tech companies by nearly 40%. It has also forced many startups to pause their IPO plans after regulators announced a stricter vetting process for overseas offerings.

China and Hong Kong accounted for about 60% of Asian tech IPOs since the end of June, down from 83% in the second quarter, according to data compiled by Bloomberg. About three quarters of Chinese companies that listed overseas this year are now trading below their IPO prices.

Meanwhile, deals in smaller markets are attracting outsized demand as investors bet on increasingly internet-savvy populations, growing consumer spending and a new class of tech entrepreneurs.

PT Bukalapak.com, an Indonesian e-commerce firm, raised $1.5 billion around the end of July in the country’s largest ever IPO, far outstripping an early goal of between $300 million and $500 million.

Zomato Ltd., an Indian online food-delivery and restaurant platform, received bids worth 1.5 trillion rupees ($20.2 billion) from large funds for its anchor tranche, making it one of the most popular Indian offerings among institutional investors. The company raised $1.3 billion in July.

KakaoBank Corp., South Korea’s first internet-only lender to go public, sold $2.2 billion of new shares last month and soared more than 70% in its trading debut.

The hurdle for allocating capital to tech companies in China “is now much higher than it was even a month ago,” said Vikas Pershad, a portfolio manager at M&G Investments (Singapore) Pte. “The net exposure to China tech is lower and the net exposure to technology-driven business models outside of China is higher.”

One banker who asked not to be named discussing client information said some Hong Kong-based investors who previously focused on Chinese deals are now participating in tech IPOs elsewhere in the region. U.S. hedge funds are also looking at India more closely, another banker said. Morgan Stanley research analysts recently advised clients to re-balance their internet holdings away from China and into India and Southeast Asia.

“Are investors more interested? Definitely,” said William Smiley, co-head of Asia ex-Japan equity capital markets at Goldman Sachs Group Inc. “Global capital competes among itself and investment opportunities are judged on both an absolute and relative basis.”

Whether the enthusiasm will last is an open question. Bukalapak.com briefly dipped below its offering price this month, though the stock has since rebounded. Zomato and KakaoBank are trading 64% and 115% above their IPO prices, respectively.

A growing pipeline of deals will put investor demand to the test. Paytm — formally called One97 Communications Ltd. — has filed for a 166 billion-rupee IPO that is set to be India’s largest ever. Policybazaar, an online insurance marketplace, is looking to raise as much as 60.18 billion rupees.

GoTo, formed by the merger of Indonesian ride-hailing giant Gojek and e-commerce provider PT Tokopedia, is planning a domestic IPO this year before seeking a U.S. listing. It’s currently raising funds at a valuation of between $25 billion and $30 billion, meaning it could become Indonesia’s biggest-ever debut.

“There are increasingly diverse sources of capital investing in leading Asia-based growth businesses,” said Gregor Feige, co-head of ECM Asia ex-Japan at JPMorgan Chase & Co. “Sovereign wealth funds are more active across the board. They’re leaning in and the global long-only community is also increasingly comfortable with local listings across Asia.”

The flood of tech IPOs in Southeast Asia and India is poised to reshape markets where benchmark indexes have historically focused on “old-economy” sectors like energy and finance.

Favorable demographics and domestic consumption growth in Southeast Asia “have not translated fully into stock market performance of late, as some of the fastest growing businesses were not listed,” said Pauline Ng, a portfolio manager at JPMorgan Asset Management. The growing representation of “new-economy” companies means these markets “can no longer be ignored,” she said.



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