FPIs eye IPOs as listed space turns pricey | Economic Times

ET Intelligence Group: Foreign portfolio investors (FPI) are turning to the domestic primary market amid rich valuations of quality stocks in the secondary market. Since the beginning of the current fiscal year, they have invested $ 3.6 billion (Rs 26,872 crore) in the domestic initial public offerings (IPOs). On the other hand, they have been the net sellers of $ 2.2 billion (Rs 17,000 crore) in the secondary market, according to the data compiled by ETIG from NSDL.What makes the primary market lucrative is the fact that IPO pricing is usually at a 10-35 per cent discount to the listed peers to attract investors, which gives valuation comfort. It also offers an opportunity to participate in the companies with several growth triggers, which may not be fully priced in. Further, buying through the IPO route assures a sizable stake with zero impact cost. FPIs also get exposure to the 'concept' stocks or companies with a different business model. 86469176FPIs are the net buyers of $1.4 billion (Rs 9,872 crore) in FY22 so far driven primarily by their interest in the IPO market. Of the 41 companies listed on the bourses since April, 11 companies with a sizeable FPI investment have given more than three-digit returns since listing.For instance, marque investors such as Fidelity and Kuwait Investment Authority hold 2.50 per cent and 1.6 per cent stake respectively in Barbeque-Nation Hospitality, which has gained 120 per cent since listing.FPIs were net buyers in the primary markets in the eight consecutive months till August with a cumulative purchase of $ 5 billion (around Rs 36,000 crore). Since the beginning of January 2021, 56 per cent of the cumulative FPI inflow of $ 9 billion (Rs 64,000 crore) was in the primary market. This has improved from the IPO share of 27 per cent and 42 per cent in 2019 and 2020 respectively.The total equity asset value of FPIs reached $ 671 billion (Rs 48 lakh crore) in September 2021 forming 20 per cent of the total market cap of India.