India’s financial markets are buzzing, and it is not just domestic companies making noise. A recent report highlights a fascinating trend: foreign corporations are increasingly drawn to list on Indian exchanges. The reason? Lucrative valuations and ample liquidity that the Indian market currently offers. With the domestic IPO market experiencing an unprecedented boom, India is rapidly becoming the new go-to destination for global firms seeking equity funding.

India Beckons Global Equity

The statistics speak for themselves. Oversubscription in primary markets is rampant, mutual funds are flush with cash, and consistent inflows, particularly through SIPs, are bolstering market depth. Even the SME segment, often considered high-risk, is witnessing robust retail investor participation. This confluence of factors signals that Indian markets possess the absorptive capacity for substantial IPOs. It is this financial magnetism that is prompting foreign companies with a significant Indian presence to consider raising capital locally.

Valuation Boost in Play

South Korean behemoths like LG Electronics, as per media reports, are actively contemplating IPOs for their Indian operations. Hyundai has already announced ambitious plans to raise ₹25,000 crore from Indian markets. Unlike their Indian counterparts, these South Korean firms are not solely focused on funding local expansion. A key driver is enhancing the valuation of their parent companies. Consider this: Hyundai Motor trades at a price-to-book value of a mere 0.49 in Seoul, starkly contrasting with Tata Motors and Maruti Suzuki in India, which command multiples over four times their book value. LG Electronics faces a similar valuation gap, trading at 0.69 times price-to-book in Seoul, while Indian electronics firms enjoy significantly higher multiples. This mirrors the valuation challenges faced by Japanese firms, prompting regulatory interventions to enhance corporate governance and shareholder returns. For South Korean family-owned businesses, often characterised by modest dividend payouts, listing in India offers a strategic pathway to unlock value.

Future Finance is Finternet

Looking ahead, the very architecture of finance might be on the cusp of a revolution. Nandan Nilekani, the tech visionary, recently articulated his vision of ‘Finternet’ at the Global Fintech Fest. He posits a future financial system that is user-centric, unified across all asset classes, and underpinned by a universal infrastructure. Tokenisation, leveraging advances in cryptography, is central to this concept. Imagine a world where diverse assets – land, property, art, financial instruments – are all tokenised and accessible via a single, interoperable infrastructure. This ‘Finternet’ aims to democratise finance, offering users greater control and broader access to financial products and services. While still nascent, this vision, already being implemented in labs globally, could reshape how we perceive and interact with financial systems.

Will this IPO rush from global firms continue? It seems likely as long as Indian markets maintain their growth trajectory and investor sentiment remains buoyant. For Indian investors, this influx of global listings presents a golden opportunity to invest in world-class companies, potentially at valuations that offer long-term value. Mutual funds, sitting on piles of cash, will also find these large IPOs an attractive avenue for deployment, a win-win for all stakeholders in the ecosystem.

Image Courtesy: X (Sanjeev)