There's a strong IPO pipeline in FY17: V Jayasankar, Kotak Investment Banking

In a chat with ET Now, V Jayasankar, Kotak Investment Banking, says when you have a good macro situation, both in the Indian capital market as well as the global capital markets, you will see IPO financing fuelling the demand among HNIs. Edited excerpts

ET Now: Why are we hampering a bit on IPO financing? I believe we have seen that surge in the recent few issues, and that would only be if the people are extremely confident about the listing prices of some of these issues going ahead, before the final subscription numbers come in. What has been your experience in some of the work that you had done in the recent past?

V Jayasankar: In the last six months, if you look at all the successful deals, the one thing you would notice in common is that they have all had some very high quality anchor investors -- both from foreign institutional investors as well as domestic. The moment you have a very strong anchor book, it feeds into the main book and this creates an effect both at the retail and the HNI segments. So the key to any high quality or a strong subscription from HNI and retail is a function of how strong your institutional book is. When the institutional book is strong and the momentum carries forward into the IPO from the anchor, what you notice is that IPO finance has come in and investors want to probably get a large share. That is where leverage comes into play. But having said, we have seen in volatile markets there are some very good quality issues where you still have good quality anchor investors but HNI investors probably keep away because in volatile markets, it is far tougher for non-institutional investors to make a call. One case in mind is Manpasand which did extremely well but it happened in a volatile market, you had no IPO financing. So good quality issues are possible in any kind of market. But when you have a good macro situation, both in the Indian capital market as well as the global capital markets, you will tend to see IPO financing fuelling the demand among HNIs.

ET Now: What is your view on the primary market going forward? A lot of large issues are probably behind us. What is the score card looking for the next three to six odd months?

V Jayasankar: The pipeline continues to be very strong. I expect the current, fiscal 2017, to be even stronger than 2016. You will see a continues pipeline of IPOs coming to the market in the next few quarters. A lot of good quality companies are coming to the market with strong management teams, track records and more importantly, I am seeing both FII flows as well as the domestic institutional flows stabilising. We saw about $4 billion of money come in March which is a huge turnaround as compared to the outflow we saw from the FII segment in the previous six months. So with the global macros, particularly on China as well as oil looking lot more stable, you are probably going to see a stronger window of opportunity for emerging markets and India continues to be bright spot. So I would expect the primary market to reflect that sentiment.