By Aaron Chaze
In a sign of returning confidence, corporate India is rushing to market with a rash of IPOs and share offerings. During the last week of September alone, 20 Indian companies filed draft prospectuses with the Securities and Exchange Board of India (SEBI) to raise Rs200 billion ($4.3 billion) through equity sales either as IPOs or to existing shareholders.
In recent months state-owned Oil India raised $578 million and National Hydro Power Corporation (NHPC) raised $1.2 billion in issues that were each oversubscribed by over 20 times—mainly by foreign investors. Indiabulls Power, co-owned by steel tycoon Lakshmi Mittal, held an IPO in the second week of October that was six times oversubscribed.
The flow of foreign investments into India also appears to have resumed, according to official capital inflow data. The latest data reported, for August 2009, show foreign direct investment (FDI) flows have leaped by over 40% year-on-year to $3.26 billion, while portfolio investment flow increased by 56% year-on-year to $926 million. For the first five months of the current financial year, which runs from April 2009 to March 2010, FDI inflows were actually down on the previous year, reflecting the weaker sentiment at the beginning of 2009. However, portfolio flows so far this year have been $11.2 billion, compared to $4 billion last year.
The economy is growing at a healthy pace, too. India’s Index of Industrial Production (IIP) for August grew by 10.4% over August 2008. For the cumulative period April-August, the year-on-year rate of growth is 5.8%. The growth rate for mining was 12.9%, manufacturing 10.2% and power generation 10.6% over August 2008.