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February 01, 2007

Indian IPOs Partying Like Its '99

posted by MR WAVETHEORY at 2/01/2007 01:30:00 AM
The number of Indian IPOs scheduled from 2007 is staggering. Over 150 companies are slated to go public and raise $10 billion this year.

There is so much euphoria, one has to wonder when the hiccup will happen and cause a hangover from the coolaide. Like '99, a bubbly stock market is the cause of the merriment and celebration.

One reason is the Bombay Stock Exchange's benchmark Sensex Index, which delivered a nearly 50% return last year and is up about 2.2% so far in 2007. In all, some 150 companies will list this year and raise an estimated $10 billion, according to Delhi-based Prime Database, which tracks IPO activity. "This will be the highest-ever amount in a year," says Prithvi Haldea, Prime's managing director. Encouraged by the general investor enthusiasm for new issues—not to mention an economy expected to hit a growth rate of almost 10% in 2007—more than 30 companies have already filed or received approval from the Securities and Exchange Board of India to raise $6.3 billion.

A crash of course would be the best cure for the bubble.

The largest IPO this year will probably be New Delhi-based real estate company DLF, which is benefiting from India's booming commercial and residential construction market. Last August, the company shelved an IPO to raise about $2.5 billion to pay debt and fund construction after minority investors complained. A smaller offering is expected this year in the $2 billion range.

The word is that the DLF founding family will become one of the richest families in the world from the IPO. DLF may be interesting, but don't forget wireless.

Wireless telecom will be interesting, too. Take Idea Cellular. This Indian wireless operator, a unit of the Aditya Birla Group, is investing heavily to expand its network and compete with Hutchison Telecommunications International in India. It hopes to raise about $450 million in an IPO expected around March.

Nice. I want my share of this bubble buffet. Get it before it's gone!

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