Share offerings in India to enjoy boom time this year

Singapore: India's initial share sales will more than double in 2010 as the market stabilises and state companies go public, according to the Bombay Stock Exchange (BSE).

The country will complete about 50 initial public offerings (IPOs) this calendar year, James E. Shapiro, the bourse's head of market development, said in Singapore yesterday. Twenty-eight companies have raised Rs97 billion ($2.1 billion, Dh7.76 billion) in IPOs so far this year, BSE data show. Twenty IPOs raised Rs195 billion last year and 38 IPOs raised Rs170 billion in 2008.

"There is definitely a long queue of government companies who have announced their intention to sell stakes and become public traded companies," Shapiro said in a Bloomberg Television interview.

Finance Minister Pranab Mukherjee aims to raise Rs400 billion in the year ending March 31 by selling stakes in state- run companies including Coal India Ltd. and Steel Authority of India Ltd. to help pay for the biggest budget deficit reduction in 19 years. A total of 67 companies have pending draft offer documents with the regulator seeking approval for share sales.

"We see a fairly healthy and diverse IPO market in India," Shapiro said.

Banks have until July 26 to bid to manage the sale of a 20 per cent stake in Manganese Ore (India) Ltd. by the federal and two state governments, according to an advertisement in the Economic Times newspaper yesterday. The company is among 68 state-run companies in which the government plans to sell stakes.

Beat BRICs

The BSE's Sensitive Index, or Sensex, was the best performer among the 20 biggest equity markets last quarter. It rose 1 per cent in the second quarter, outperforming the so- called BRIC nations that include Brazil, Russia and China. India's $1.2 trillion (Dh4.41 trillion) economy expanded 8.6 per cent in the three months through March, the fastest pace after China among Asia's major economies.

The BSE, Asia's oldest bourse founded in 1875, and Eurex, Europe's largest exchange partly owned by Deutsche Boerse AG, plan to start trading in Sensex futures and options, according to an e-mailed statement yesterday.

BSE products accounts for less than 1 per cent of Indian equity options and futures trading, which is dominated by the rival National Stock Exchange, Shapiro said. The NSE was incorporated in 1992, according to its website.

"We are quite a bit behind the NSE," he said. "The Sensex is the benchmark index but it's not the most actively traded derivative in India. We'd like to change that."

The Sensex futures and options will be available during Asian and European hours and the BSE is optimistic that several global financial companies will make a market in the derivatives, Shapiro said.

"It's part of our strategy to grow and develop visibility for the Sensex outside India," he said. Actively traded Sensex derivatives overseas would boost interest in Sensex futures and options in the country, he said.

The BSE plans to list itself as soon as the regulator has decided on the requirements for exchanges to go public, Shapiro said. "We're kind of ready to go," Shapiro said.

A committee of the Security and Exchange Board of India, the country's market regulator. may complete a report by August or September, he said. "Assuming it does not require us to do anything too dramatic, we'll do whatever it requires and move forward."

An IPO by the BSE is more likely next year, he said.