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India’s record-breaking capital-raising spree will continue in 2025 given the strong pipeline of firms looking to go public, the head of the country’s oldest exchange told Reuters.
“There are 90-plus companies that have already filed their draft prospectus with the regulator, looking to raise an estimated 1 trillion rupees ($11.65 billion) at some point this year,” Sundararaman Ramamurthy, the CEO of BSE said on Thursday.
Last year, 91 large firms went public on the BSE, earlier known as the Bombay Stock Exchange, and the NSE, or National Stock Exchange, raising a record 1.6 trillion rupees via initial public offerings (IPOs), according to analytics firm Prime Database.
Overall public equity fundraising more than doubled to 3.73 trillion rupees.
Mr. Ramamurthy said the IPO boom has more Offers for Sale (OFS), where large shareholders sell existing shares, with the proceeds going to them, instead of fresh issues that provide firms with capital to invest.
“I would like to see the OFS percentage coming down and fresh capital raising go up.”
BSE earned 1.57 billion rupees in listing fees in the first-half of 2024-25, according to East India Securities. This compares to 1.3 billion rupees in fees reported a year earlier.
Mr. Ramamurthy declined to comment on BSE’s financials ahead of its upcoming quarterly earnings.
The gains from the IPO pipeline, however, are being tempered by tighter rules for trading derivatives.
The notional value of derivatives traded in India has declined 40% since September, in anticipation of the new rules, while premiums have fallen 15%-20%, Mr. Ramamurthy said.
A further decline could be expected since three of the six new rules introduced by the markets regulator will be implemented by April.
“We have to wait till April to judge the final impact,” he said.
BSE’s shares have doubled since November 20 when the rules were implemented as analysts expect a lower impact on the exchange compared to the NSE, which has larger derivative trading volumes.
DIVERSIFYING REVENUE STREAMS BSE, which earns a major chunk of revenue from transaction charges and services to firms including listings, is looking to diversify its income streams, Mr. Ramamurthy said.
It aims to grow its index business, which licences indexes used by funds to benchmark investments.
“We have launched 15 indices since the middle of last year and there is room to continue working on that front,” he said.
It is also considering expanding its co-location services, which are in demand as high-frequency and algorithmic trading increase.
“There is good possibility of generating revenue (in co-location), but we have not made a decision yet. We will look at it after April once market volumes settle down.”
Published – January 13, 2025 07:00 am IST
