India IPO Market Gets Reality Check as $4 Billion Lockups Expire
(Bloomberg) -- Follow Bloomberg India on WhatsApp for exclusive content and analysis on what billionaires, businesses and markets are doing. Sign up here.
India’s newest stocks joined a broader market selloff in the country as sale restrictions on about $4 billion of such shares expired on Monday.
That’s adding pressure to a stock market already down $1 trillion in value since mid-December. Lockups in FirstCry operator BrainBees Solutions Ltd., Ceigall India Ltd., Ola Electric Mobility Ltd. and Unicommerce eSolutions Ltd. were among those that ended on Monday, according to data compiled by Nuvama Alternative & Quantitative Research.
On Monday, shares of most of the companies cited by Nuvama Alternative fell, led by a 20% drop in train signaling firm Quadrant Future Tek Ltd. Unicommerce eSolutions’ shares also slumped 10% in their biggest plunge since trading debut in August. Ola Electric, the Softbank Group Corp-backed electric scooter maker, tumbled 3.3% while food delivery firm Swiggy Ltd.’s shares closed almost 5% lower.
It was India’s biggest lockup expiry in recent months, but not all these shares were up for sale as the companies’ founders hold sizable portions, according to Abhilash Pagaria, head of the researcher Nuvama.
For more on IPOs, Terminal users can subscribe to the ECM Watch newsletter here.
The expiries come amid a continued rush of Indian initial public offerings — the securities regulator says it’s processing more than 60 applications — which has defied the broader pessimism engulfing the nation’s shares. Concerns about the slowing economy and earnings growth have contributed to a 20% decline in the total market capitalization of Indian stocks from a December high to $4.1 trillion.
“If the weak sentiment in the secondary market continues, it’s likely to create headwinds for the primary market as well,” said Sunil Damania, chief investment officer of Marketsmojo Asset Management.
Other companies where lockups expired include Niva Bupa Health Insurance Co. and Acme Solar Holdings Ltd., according to Nuvama Alternative.
IPO-bound firms have largely retained their listing plans despite the recent slump, with Hexaware Technologies Ltd.’s share sale in the next few days set to mark the year’s first billion-dollar offering .
Last year, proceeds from Indian IPOs climbed to a record $21 billion via more than 300 listings. While Hyundai Motor India Ltd.’s $3.3 billion IPO last year was the country’s biggest ever, around two-third of the debuts were small firms that raised less than $10 million.
--With assistance from Santosh Nair.
(Updates with share prices in second paragraph. An earlier version of this story was corrected to fix the total amount in headline and first paragraph.)