India is about to get two of the largest IPOs. Jio and the NSE, within months of each other. Both are pure offer-for-sale deals and no fresh capital is being raised.
Foreign investors in both companies, including Meta, Google, KKR, Vista Equity, and the sovereign funds of Abu Dhabi, Saudi Arabia and Singapore, collectively hold somewhere between $75bn and $85bn in stock.
Once these listings clear, almost all of it is free to leave. That is close to a tenth of India’s entire forex reserves, potentially bleeding out over two to three years as lock-ups lapse.
What I feel is this, every month, crores of ordinary retail guys are putting money into SIPs thinking they are building long-term wealth. But after reading all this, it somehow feels like that money is also becoming the liquidity helping some of the world’s largest funds quietly exit India.
The government cannot stop foreigners from cashing out. Wondering how this gets played out.
But is this not how it should be. The original shareholders of these companies believed in their business and put in their capital expecting returns. When the company grows, they have all the right to sell or take back their money. It is upto the new shareholder to decide whether to buy or not. As most are foreign shareholders when they injected funds into the company, we got the foreign currency then, did we not, so now when they want it back they should take it out.
I doubt Govt would let it happen that easily. I remember Nokia fiasco - which clearly told the world they’re free to enter but not exit. However this time, it’s the Ambanis: Political nexus may override any currency concerns.
If foreign capital is indeed heading for the exit, the critical question becomes whether domestic liquidity has the depth and long-term conviction to provide a floor, or if we’re just trading one set of volatility drivers for another.
