Tata Capital set for debut after India’s biggest IPO of year

Tata Capital, a unit of India’s oldest conglomerate, will kick off what is going to be a big week for debuts in the country as shares of LG Electronics Inc.’s local unit are scheduled to start trading on Tuesday

Tata Capital Ltd. is poised to start trading in Mumbai after the shadow lender wrapped up India’s biggest initial public offering of the year.

The offering raised Rs 15,500 crore ($1.7 billion) — the most since Hyundai Motor India Ltd.’s record $3.3 billion deal last year — after attracting funds managed by Morgan Stanley and Goldman Sachs Group Inc. among its anchor investors. Based on gray market trading, the stock is likely to be little changed on Monday from its IPO price of 326 rupees.

Tata Capital, a unit of India’s oldest conglomerate, will kick off what is going to be a big week for debuts in the country as shares of LG Electronics Inc.’s local unit are scheduled to start trading on Tuesday. Their performance on opening day will be closely watched as scores of Indian companies prepare to go public and raise billions of dollars in India’s increasingly hot IPO market.

The company is positioned for long-term growth, backed by a strong brand and a widening network of branches across India, Indian brokerage Choice said in a note. But given that some of its measures like return on assets are lower than those of peers, the broker only recommended the stock as a long-term investment, it said.

Tata’s listing comes amid India’s growing status as a global fundraising hub, powered by deep domestic liquidity and an expanding retail investor base. The country has become one of the busiest IPO markets worldwide over the past two years, drawing global investors eager to tap its fast-growing consumer economy. October is shaping up to be India’s biggest month ever for IPOs — with proceeds expected to top $5 billion.

Tata Capital, which had nearly 1,500 branches as of the end of March, attracted global and domestic institutional investors in the IPO, and the offering was sold out on the final day of bidding. That’s in spite of strains faced by local non-bank lenders in recent quarters. But things may be looking up for the industry after India announced measures designed to benefit the industry.

More broadly, India has emerged as the world’s fourth-largest IPO market this year, with proceeds exceeding $11 billion in the first nine months of the year, according to data compiled by Bloomberg. That’s after last year’s record of almost $21 billion.

Kotak Mahindra Capital Co., Axis Bank Ltd., HDFC Bank Ltd., ICICI Securities Ltd., IIFL Capital Services Ltd., SBI Capital Markets Ltd. and local units of BNP Paribas SA, Citigroup Inc., HSBC Holdings Plc, and JPMorgan Chase & Co. managed Tata Capital’s IPO.