Foreign equity inflows expected to touch $15 B

By agencies   |   Monday, 11 June 2007, 19:30 IST
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Mumbai: Foreign equity inflows are expected to reach a record high of $15 billion this calendar, owing to a series of scheduled multi-billion-dollar share offerings. The biggest of the offerings is slated to be real-estate major DLF?s IPO (Rs 9,625 crore). This will be followed by follow-on public issues by State Bank of India and ICICI Bank later this year. The Business Standard reported this today. These offerings will take the foreign institutional investor (FII) capital in domestic stocks, which measures $4.1 billion for the first five months of the calendar, to unparalleled heights. Analysts and market watchers believe that the remaining seven months will attract foreign inflows of $8-10 billion. The figure has been arrived in the light of CLSA Asia Pacific Markets study showing that 19 Indian firms may raise $18-20 billion through equity issues in the remaining part of the calendar year. The study notes that nearly 40 per cent of the amount, i.e. $8.55 billion may come from FIIs in the domestic market and Global Depository and American Depository Receipts (GDR/ADRs), which are negotiable certificates in one country representing a specific number of shares of a stock traded on an exchange of another country. With likely inflows of $8.55 billion through public issues, follow-on offers and ADR/GDRs, the foreign inflows are likely to touch $12.64 billion. In addition, noted the Business Standard, with a part of the $11 billion foreign currency convertible bonds (FCCBs) issued during the past two years to be converted during the current year, foreign inflows can easily cross $15 billion. ?We feel that foreigners? appetite for these IPOs and follow-on issues will be good,? Sandeep Sharma, senior vice-president of Societe Generale told Business Standard. ?Valuations in the secondary market are not cheap, but FIIs are smart investors and use IPOs and FPOs to buy into Indian equities,? he added. The previous high in foreign investments is $10.70 billion recorded in 2005. FIIs, since they were allowed to buy Indian equities in December 1993, have bought equities worth $53 billion.