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What is the story about?
"How much supply of paper is there?" Kotak Institutional Equities' Sanjeev Prasad begins his latest note with this question.
The answer to this lies in two parts: One, the valuations, and two, strategies from majority shareholders, Prasad wrote in his note.
India has had a record breaking year in terms of IPOs, as well as exits / stake sales by promoters and PE/VC funds.
"The continued large supply of paper in India in the primary and secondary markets from private equity entities and promoters simply reflects high valuations across most sectors and stocks," Kotak's Prasad wrote in the note, adding that the supply of paper will remain at elevated levels due to two important factors.
One of the factors is as long as valuations remain high, which incentivizes promoters to monetise a part or even their entire shareholding in listed entities.
Second factor is retail investors through the domestic institutions, which continue to make "fantastic" offers in the market through their price-agnostic purchases at all price points, the note said further.
"We expect PE investors to sell at the "right" valuations, as it is a straightforward business proposition for them," Kotak's note said, adding that they hold substantial stake in many listed companies, which will eventually be sold.
The note also observed that promoters of Indian companies will treat their ownership in companies as investments and will be willing to sell an even larger portion of their companies, purely on commercial logic.
Indian equity markets have already seen funds worth $18 billion raised via IPOs and $7 billion via QIPs, as per the Kotak note.
The answer to this lies in two parts: One, the valuations, and two, strategies from majority shareholders, Prasad wrote in his note.
India has had a record breaking year in terms of IPOs, as well as exits / stake sales by promoters and PE/VC funds.
"The continued large supply of paper in India in the primary and secondary markets from private equity entities and promoters simply reflects high valuations across most sectors and stocks," Kotak's Prasad wrote in the note, adding that the supply of paper will remain at elevated levels due to two important factors.
One of the factors is as long as valuations remain high, which incentivizes promoters to monetise a part or even their entire shareholding in listed entities.
Second factor is retail investors through the domestic institutions, which continue to make "fantastic" offers in the market through their price-agnostic purchases at all price points, the note said further.
"We expect PE investors to sell at the "right" valuations, as it is a straightforward business proposition for them," Kotak's note said, adding that they hold substantial stake in many listed companies, which will eventually be sold.
The note also observed that promoters of Indian companies will treat their ownership in companies as investments and will be willing to sell an even larger portion of their companies, purely on commercial logic.
Indian equity markets have already seen funds worth $18 billion raised via IPOs and $7 billion via QIPs, as per the Kotak note.
