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India leads global IPO market, surpassing US exchanges

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Australia sees 294% jump in IPO volume in 2024, driven by

major

deals

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Dealmakers hope China's economic stimulus measures will

prompt

increased exposure to mainland equities in 2025

By Scott Murdoch

SYDNEY, Dec 20 (Reuters) - Dealmakers expect the

momentum for new share sales in India, now the world's busiest

market for initial public offerings, and Australia in 2025 will

cushion the impact of sluggish Chinese deals in the Asia

Pacific.

The Mumbai-based National Stock Exchange outranked the

bigger U.S. exchanges in the amounts raised by IPOs for the

first time, driven by India's robust economic growth and

increasingly active domestic investors, following the rush of

IPOs in 2024.

There was a 149% increase in the value of IPOs in India in

the past year to $18.4 billion, according to LSEG data, which

contributed to total equity capital market activity almost

doubling.

The Indian exchange accounted for 16.8% of global market

share for IPOs, outranking the New York Stock Exchange and

Nasdaq, the data showed.

"Within emerging market portfolio countries, India is the

bright spot," said Peihao Huang, JPMorgan's ( JPM ) co-head of

Asia Pacific equity capital markets.

"Our forecast is for 2025 to outperform 2024 based on

the pipeline visibility, but that will to a certain degree

depend on where the Fed rates will be, and where other markets

within emerging markets perform, for example, (if there is) a

strong China recovery," Huang added.

Besides India, two major deals - HMC Capital's ( HMCLF ) A$2 billion

($1.25 billion) Digico REIT listing and fast food chain

Guzman y Gomez's ( GYGLF ) A$335.1 million IPO - helped

Australia's dormant new share sale market record a 294% jump in

year-on-year volume in 2024.

Despite being the largest Australian IPO for six years,

data centre owner Digico saw its shares fall by up to 20% in the

first two days of trading after plunging below the issue price

in the first trading session last week.

"The recent disappointing performance of the latest batch of

IPOs, excluding GYG, means that for future deals, there will

need to be a reset on price expectations to meet investor

demand," said Ron Shamgar, head of Australian equities at TAMIM

Asset Management.

However, a lack of major IPOs in the past three years before

Digico and an increasing number of big companies being taken off

the ASX has fuelled investor demand for new stocks, Macquarie's

co-head of Asia Pacific ECM Georgina Johnson said.

"Large transactions that are well supported and trade well

in the after market will give vendors and listed investors

confidence," Johnson said, adding that private equity companies

will be looking to IPOs in light of their depressed asset

valuations in recent years.

CHINA EXPOSURE

The Asia Pacific region as a whole saw a 33% fall in IPO

volume this year, while the value of Chinese IPOs remained weak

with $13.3 billion worth of new share sales in 2024, according

to LSEG, an almost 74% decline from last year.

Regulators in mainland China and Hong Kong have told some of

the world's biggest banks to help speed up Chinese companies'

listings in the city, Reuters reported on Dec 9, citing sources

with knowledge of the matter.

In Hong Kong, a total of $5.3 billion was raised via IPOs,

slightly down from $5.7 billion in 2023, the LSEG data showed.

Taking into account secondary listings like Midea's $4

billion transaction in September and SF Holding's $750 million

deal in November, share sale volumes rose to $10.6 billion in

2024 from $5.9 billion last year.

Dealmakers are hopeful China's economic stimulus measures

will prompt investors to increase exposure to mainland equities

in 2025. Hong Kong's Hang Seng Index is up about 20%

since the first stimulus measures were announced in September.

"While questions remain as to whether the policies will

work, the fact is that Chinese stimulus policies are in place to

shake up the economy and boost the market," said James Wang,

Goldman Sachs' co-head of Asia ex Japan ECM.

"Previous expectations were that China could get worse. Now

the stimulus and consequent market rally has provided the

confidence to look at valuations."

($1 = 1.6054 Australian dollars)