![]() Share prices of many companies that went public in recent years have fallen sharply. And they’re skittish that still-high inflation poses a risk to the business prospects of any company that would go public.Īnd that’s not all. They’re wary because the central bank does not appear to be done increasing the cost of money. Investors are afraid of the high cost of money due to Fed rate hikes, says Avi Deutsch, a managing director of wealth management firm Robertson Stephens. “I would say the IPO market will recover in late 2024,” Torres says. When Will the IPO Market Return to Normal?įor now, institutional investors-who would buy blocks of stock in any IPO-remain reticent about plunging cash into IPOs at the prices IPO stock executives are demanding. Between 19, over 60% of newly public companies saw negative returns after five years. Still, the struggles of IPOs in 20 should not surprise savvy investors who understood the bigger picture. “I don’t expect IPOs to rebound while interest rates remain high, amid quantitative tightening and uncertainty about the trajectory of interest rates,” says Jose Torres, senior economist at InteractiveBrokers. The firehose of IPOs dried up along with the easy money that fueled new offerings as the Federal Reserve began its campaign of interest rate hikes to beat down historically high levels of inflation. Unfortunately, the good times did not last. That optimism was turbocharged by retail investors piling into meme stocks and economists’ predictions that the good times would last as governments eased Covid-19 restrictions and shoppers returned to brick-and-mortar stores. ![]() I welcome your comments and updates.Remember IPOs? A cavalcade of companies went public during the peak of the Covid-19 pandemic in 20 as the stock market soared, driven higher by the proliferation of cheap money and retail investors stuck at home with cash burning a hole in their bank accounts.īig names, from Airbnb and Coinbase, to Palantir and Rivian rode a wave of animal spirits to impressive IPO debuts. If this were to happen, India's private sector would have greater access to a huge source of growth capital, enabling it to continue to create jobs, foster entrepreneurship, increase competitiveness, and drive innovation in the world's fifth largest economy. ![]() US investors may soon be better positioned to share in India's innovation and economic growth. Yet, while US investors have clearly shown a healthy appetite for good Indian companies, the current supply of US-listed Indian companies is very small relative to the large size of the Indian economy. In addition, in August 2018 the bank completed a massive $1.81 billion follow-on offering of American Depositary Shares. "And tech-related companies often seek sophisticated investors in these markets for potentially higher valuation and effectively competing with global peers."ĭespite extra work required to maintain a US-Indian dual listing, Indian flagship companies such as Infosys (NYSE: INFY), Wipro (NYSE: WIT), and HDFC Bank (NYSE: HDB) have had successful dual listings in terms of boosting market capitalization, attracting liquidity, and raising capital.įor example, HDFC Bank's market capitalization, roughly $1 billion when it listed on the NYSE in 2001, is now around $90 billion and average daily value of trading in the US is about $70 million. “Large private Indian companies are increasingly backed by foreign investors, who may prefer exiting in international markets with a fungible currency such as the US dollar," says Rajiv Gupta, Partner, Latham & Watkins in Singapore. Pent up demand among Indian startups for an overseas listing may be substantial, especially among those backed by foreign investors such as Alibaba, Sequoia, Softbank, and Tencent. Opponents of the single overseas listing option have voiced concern that too many Indian companies might opt for a single listing overseas and contribute less to the vitality of the domestic capital market, while its proponents believe that Indian companies that choose this route - especially those in the tech sector - would be able to obtain higher valuations and access global capital more easily. ![]() The news comes as the government prepares its long-awaited new policy on overseas listings. Indian companies that pursue an IPO listing on a foreign stock exchange will not be required to incur the added cost of a secondary listing in India, according to reports.
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