The shadow lending division of the Tata Group, which raised 155 billion rupees ($1.7 billion) in India’s biggest initial public offering (IPO) this year, will go public on Monday.
Twin Billion-Dollar Debuts
The Indian division of LG Electronics Inc., a company based in South Korea, will follow a day later. In 17 years, LG’s sale was the most oversubscribed transaction of such magnitude.
Following the completion of two of the largest IPOs in the country this year, Tata Capital Ltd. and LG Electronics India Ltd. will start trading in Mumbai in the coming days. Their debuts will put the resilience of one of the most active equity capital markets in the world to the test.
The shadow-lending division of the Tata Group, which collected 155 billion rupees ($1.7 billion) in India’s biggest IPO this year, will go public on Monday. The Indian division of LG Electronics Inc., a company based in South Korea, will follow a day later. In 17 years, LG’s sale was the most oversubscribed transaction of such magnitude.
India’s IPO Boom Continues
The two listings highlight how India is becoming a major global fundraising destination thanks to its strong domestic liquidity and rising number of individual investors. Over the last two years, the nation has emerged as one of the busiest IPO marketplaces globally, attracting investors from across the globe who are keen to capitalize on its rapidly expanding consumer economy. With anticipated profits exceeding $5 billion, October is on track to become India’s busiest month for IPOs.
These launches carry a lot of weight for the businesses, but more generally, they will probably set the standard for the hundreds of Indian companies awaiting their IPOs. The latest spike in activity is raising hopes that 2025 earnings from new listings may surpass the $21 billion record haul from the previous year.
As firms scramble to take advantage of record liquidity and positive investor sentiment, “A solid launch of at least one of the huge IPOs may set the ground for a new wave of jumbo listings in the coming months,” said Dharmesh Mehta, CEO of DAM Capital Ltd. “However, any indications of weakness might swiftly dampen the excitement and cause the offers to suffer.”
Market Awaits Listing Performance
However, the size of the offerings and the companies’ well-known names—LG leads several home appliance categories in India, and Tata is one of the most well-known brands in the country—do not ensure success, as the three biggest IPOs in the country since 2020 all failed on their first day of trading. However, Bloomberg’s data shows that India’s two other billion-dollar offers also increased this year.
According to statistics from IPOCentral.in, as of Friday in Mumbai, Tata Capital was marginally higher than the IPO price, while LG Electronics India was trading on the gray market at almost 30% over the IPO price.
According to analysts like SBI Securities and Centrum Capital, Tata Capital and LG India are still cheap when compared to their local counterparts based on IPO pricing and metrics like book value and profits.
Strong Investor Participation Seen
Demand was aided by the possibility of finding a good deal, especially with LG, which, according to exchange statistics, attracted bids 54 times the number of shares being sold, ranking second among billion-dollar IPOs in India only behind Reliance Power Ltd.’s 2008 offering. A number of well-known companies participated in the transaction, including anchor investors like BlackRock Inc. and Fidelity International Ltd. and sovereign wealth funds from Abu Dhabi, Norway, and Singapore.
This is in contrast to earlier this year, when LG lowered its estimates for the amount of money the transaction would earn and halted its ambitions for an IPO.
In the meanwhile, institutional investors remained the primary source of demand for Tata, with bids for the company double the quantity of shares on sale. Its anchor investors were funds run by Morgan Stanley, Goldman Sachs Group Inc., and Nomura Holdings Inc.
Tata Capital Strengthens Position
Furthermore, according to the IPO pricing, Tata Capital is on track to become the fourth-largest shadow lender in India by market value, after Jio Financial Services Ltd., Bajaj Finance Ltd., and Bajaj Finserv Ltd.
Despite recent worries about non-bank financing businesses and their capacity to handle an increase in bad loans, exposure to riskier borrowers, and a potential economic downturn, the transaction proceeded. It also occurred at a tumultuous period for Tata; a heated boardroom dispute at the charitable organization that oversees India’s oldest company prompted government intervention.
According to Bloomberg, the combined IPO proceeds in India this year will surpass $15 billion due to the offers of Tata and LG. Other upcoming joint ventures include ICICI Prudential Asset Management Co., Pine Labs Ltd., Lenskart Solutions Ltd., and Canara Bank.
IPO Momentum
The enthusiasm behind the IPO reflects India’s efforts to modernize its financial markets and attract long-term global investment. While the Reserve Bank of India recently loosened loan regulations for IPO investors, the Securities and Exchange Board of India (SEBI) also eased rules for large private companies.
According to Jefferies Financial Group Inc., the influx of upcoming listings may cause India’s IPO market—now the fourth largest globally—to surpass its previous record.
High-Profile IPOs Signal Strength
In contrast to the overall stock market, where the Nifty 50 has lagged regional peers this year and foreign investors are expected to withdraw a record amount of money, initial public offerings (IPOs) have been quite popular. Even so, an IPO performance index that tracked shares a year after listing dropped 0.2% for the year.
“The success of these two high-profile offerings will send a strong signal to investors and issuers alike,” said Rajat Rajgarhia, Executive Director of Motilal Oswal Financial Services Ltd. “India’s markets are now sufficiently liquid and deep to handle major transactions like LG and Tata Capital, opening the door for a strong pipeline of high-value IPOs in the coming months.”