HDFC Bank's $324 million share offering in India was more than 4 times oversubscribed, according to bankers and investors, a strong reception that is expected to encourage a rush of domestic equity sales from other companies. The private sector bank launched the offering overnight, with an up to 20 billion rupees ($324 million) share sale in India and a sale of up to $1.3 billion in the United Sates.
HDFC shares rose as much as 2.4 percent on Thursday after the sale, which is intended to provide the lender with a buffer for an expected acceleration in Indian credit growth. The strong reception is likely to spur others, as Indian corporates rush to take advantage of a robust equity market. Tata Motors Ltd last month announced an up to 75 billion rupees ($1.2 billion) share sale, while State Bank of India has plans to raise up to 150 billion rupees.
The government is also in the midst of selling stakes in state-run companies to meet its fiscal deficit target this year. Analysts say most companies are likely to opt for qualified institutional placements (QIPs), or quick share sales of already listed companies, given they are fast and have less regulatory restrictions than other forms of public offers.
"One can expect a revival in IPO markets but QIPs issuance may outpace that, given the ease of process and institutional demand for Indian paper," said V Jayasankar, senior executive director and head of equity capital markets at Kotak Investment Banking.Of the six equity capital market fundraising this year, three have come in the form of QIPs, according to Thomson Reuters data.