The financial year 2024-25 is set to be exceptional for IPOs, expected to surpass the previous year’s Rs 60,000 crore fundraising, according to Prime Database’s Pranav Haldea. The average offer size is around Rs 800 crore.
Despite the 2024 election cycle, 52 IPOs are projected to raise Rs 50,000 crore, significantly higher than the 28 IPOs raising Rs 7,500 crore in the previous four election cycles. Seven IPOs raised nearly Rs 15,000 crore in April and May, typically slow due to elections.
A strong secondary market and investor interest are driving this surge. Over the next two months, more than 24 companies aim to raise over Rs 30,000 crore, with SEBI already approving 18 IPOs for over Rs 20,000 crore.
Fitch Ratings’ Jeremy Zook stated that including Indian bonds in global indices will only modestly support India by diversifying the investor base and slightly lowering borrowing costs, due to limited foreign participation.
Despite expectations of reduced borrowing costs from foreign inflows, the impact is expected to be modest. Indian bonds will join JPMorgan’s global index on June 28, with potential $24 billion inflows over 10 months.
However, concerns about volatility from foreign portfolio investments persist. FPIs have increased investments in Indian government securities, but Zook believes FPI flows will remain modest, limiting potential volatility
South Park Commons (SPC), a community of founders and engineers with an early-stage venture fund, has opened its first international outpost in Bengaluru, India, in collaboration with Flipkart cofounder Binny Bansal.
Founded by Aditya Agarwal and Ruchi Sanghvi in 2016, SPC aims to support early-stage entrepreneurs. Bansal highlighted that this partnership will allow him to back more early-stage ideas at scale.
SPC differentiates itself from other incubators by supporting individuals even before they have a concrete business idea. The move is driven by India’s abundant talent and the evolved startup ecosystem.
After regulatory action against Paytm Payments Bank (PPBL), its market share in Fastag toll payments dropped from 16% in January to 2% in May. Commercial banks have since gained this market share, with IDFC First Bank holding 30%, ICICI Bank 26%, Axis Bank 18%, and HDFC Bank 10%.
These banks benefit from the toll payments business by accessing tolling companies and fleet managers, enabling cross-selling opportunities despite lower margins and high operational costs. HDFC Bank accounts for 25-30% of new Fastag issuances, with IDFC First, ICICI, and Axis Bank handling most of the rest.
As gold prices surged by 18% over the past year, many borrowers are pre-closing their gold loans to reclaim their valuable assets.
This has led to a decrease in gold auctions by gold loan companies, with Muthoot Finance’s auctioned gold dropping from ₹2,203 crore in FY23 to ₹892 crore in FY24. The trend indicates a shift in the borrower demographic, with more affluent individuals now opting for gold loans due to their ease of access.
The price of 10 grams of gold (999 purity) reached ₹73,477 in April 2024, nearly tripling over nine years. Rising gold prices encourage borrowers to repay loans early, anticipating further appreciation.
Life insurance companies in India are bracing for a reduction in new business margins due to recent IRDAI directives on surrender values for early exits.
The regulator now requires insurers to offer surrender values from the first policy year, provided one full year’s premium is paid. The calculation of Special Surrender Value (SSV) can include an additional 50 basis points above the 10-year GSec yield, which stood at 6.98%.
To mitigate margin impacts, insurers may shift to trail-based commissions linked to policy persistency. The full impact will be felt in the second half of the fiscal year, as existing products can be sold until September 30.
