IPO exits twice as popular in China as in India – study

The study, which relied heavily on data provided AVCJ research, looked at more than 1,200 private equity exits in China and India over the past 10 years. It found that in China, 63% of private equity investments led to IPO exits compared to 33% in India. The breakdown was similar for venture capital, with 73% of China investors leaving via the public markets compared to 34% in India. Unsurprisingly, trade sales were the preferred by buyouts, accounting for 79% and 86% of exits in China and India, respectively.

The strength and size of the IPO market, the fact that private equity involvement can expedite a listing and political and regulatory hurdles for potential foreign - and to a certain extent domestic - strategic buyers were given as reasons for the popularity of IPO exits in China.

Doug Coulter, head of private equity for Asia-Pacific at LGT Capital Partners, thinks capital markets exits, particularly on foreign exchanges, could become more popular among certain kinds of Indian companies. He notes that private equity-backed travel website MakeMyTrip raised $70 million through its NASDAQ IPO last year, the first by an Indian company in the US for four years. The stock surged 90% on its trading debut.

"If MakeMyTrip listed in India it would have been a very different story - there's no way it would have achieved the multiples it got in the US," Coulter tells AVCJ.

One of the reasons the company was able to list in the US - following a path already well trodden by Chinese tech players - was that its status as a Mauritius incorporated entity meant the regulation requiring Indian companies to list domestically before venturing overseas didn't apply.

"You will see a lot more of these," Coulter says. "A lot of GPs are sitting up and taking notice."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• South Asia
• Exits
• LGT Capital Partners