Indian Startups' IPO Parade To Accelerate As Market Matures: Jefferies India MD

(MENAFN- Live Mint)

Mumbai: For most companies in the new-economy segment, public listing is likely to be the end game as mergers and consolidation may not play out, Ashish Jhaveri, managing director and head of India investment banking at Jefferies India, said. The pure-play advisory firm expects many new-age companies to list in India over the next few years.

Given that most of these companies have fragmented shareholding where venture capital, private equity investors, or even cross-over funds are part of the capitalization table, Jhaveri feels the exit timelines differ and are better suited for a public market exit. This has also significantly increased the block deal activity in the market since most investors see that as a means of exit.

“Also, these investors have realized that an IPO is not an event where you extract maximum value," Jhaveri said in an interview to Mint, alluding to how most recent public issues have seen lower pricing than expected so as to leave more value on the table for incoming investors.

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The pureplay advisory firm is betting big on four buckets of opportunity in India: corporates, private equity, equity capital markets, and M&A. In the last couple of years, it has doubled its investment banking headcount to 30 and is now advising clients across sectors in an effort to become a full-fledged advisory firm.

Top investment bank

In 2024, Jefferies was one of the top global investment banks in India in terms of fee income, data from LSEG shows.

Jefferies' top transactions in the last year include Kedaara-backed Vishal Mega Mart's $944 million IPO, EQT-backed Sagility's $250 million IPO, Motherson's $763 million QIP, Varun Beverages' $890 million QIP, and JSW Energy's $600 million QIP.

The firm also advised notable M&A transactions, including Advent's sale of Bharat Serums & Vaccines to Mankind Pharma in a $1.64 billion deal, ChrysCapital's sale of GeBBS Healthcare to EQT, HDFC's sale of Credila to EQT in a $1.3 billion deal, and Apax's sale of Healthium to KKR.

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Domestic consolidation and private equity are driving M&A, and strategic appetite for inbound M&A has been limited, says Jhaveri.“In the last four to five years, global strategics present in India have been taking a call as to whether they want to continue in the market or exit. We have seen that play out already, where a bunch of strategics across sectors have exited, fuelling the deal flow," Jhaveri said.

Increase in deals

With private equity investors heightening their exposure to buyouts in India, it has led to more deals per lifecycle of a company, and investors are bringing in co-investors like general partners (GPs) or limited partners (LPs) within 2-3 years of the buyout and finally evaluating IPOs and blocks as exits or potentially M&A exits, Jhaveri said.“The type of transactions, the velocity of transactions, have increased in a company's life cycle over the last three to four years, as the markets have matured," he added.

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Armed with new regional funds, most global PE investors have heightened their pace of deal-making in India. Indian strategics, having cleaned up and deleveraged their balance sheets in the last few years, are also looking to do acquisitions opportunistically.

The new tariff regime is also forcing companies to take some strategic calls, Jhaveri said.“Some companies are evaluating whether to set up plants in the US or also diversify their geographic exposure. People are right now trying to gauge the impact of the new tariff regime and recalibrate their approach," he said.

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