Global firms exploit India's IPO boom to take profits back to home countries

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By Vibhuti SharmaIndia's red-hot initial public offering market may look irresistible as foreign firms line up for listings, but the rush is not about raising funds to expand in a fast-growing market; it's about sending billions of dollars back to headquarters.Just one of six foreign-based companies that listed their Indian units in Mumbai since 2024 raised new funds, with all others structured purely as secondary offerings - or offer for sale (OFS), where existing shareholders sell their holdings to the public without raising any new funds, according to data from Prime Database, an Indian market research firm.Foreign-based parents of companies that have long invested in India pocketed nearly $5 billion through such secondary-offering IPOs, with Hyundai Motor KRX:005380 and LG Electronics KRX:066570 accounting for more than 80% of those payouts, the data showed. Simply put, for each dollar raised in these IPOs taken together, more than $59 went out.And the trend is continuing: the planned $1 billion IPO of Walmart's NASDAQ:WMT Indian payments arm and Modern Times Group's OMXSTO:MTG_A $335 million IPO of its local gaming unit will both take the OFS route.This week, Coca-Cola NYSE:KO said the planned listing of its Indian bottler will have the American firm sell a portion of its stake. Banking sources said Carlsberg's OMXCOP:CARL_A planned Indian IPO will also have no new funds raised - it will also be an OFS.The trend, which bankers and economists say is a result of sky-high stock valuations in India in recent years, shows that the prospect of a lucrative partial exit from Indian investments has become more attractive to many foreign companies than raising new funds to expand.Global companies are pursuing "India listings as this provides them liquidity as well as a positive impact on the market cap for their parent," said Prashant Gupta, a partner at law firm Shardul Amarchand, which advised both Hyundai and LG on their OFS-structured IPOs.Modern Times declined to comment, while Carlsberg said it is "exploring different options for increasing shareholder value which may potentially include an" Indian IPO.Walmart's Indian unit, PhonePe, Hyundai, LG and other companies did not respond to Reuters requests for comment.RUPEE WOESThe OFS trend comes at a troubling time for the Indian rupee, which has fallen 13% against the U.S. dollar since 2024 and 6% so far th...

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