Surging markets fuel IPO boom in Asia

MUMBAI, India — Coal India Ltd., the world's largest coal company, announced Tuesday a $3.4 billion initial public offering that is India's largest-ever and adds to a growing list of record-breaking IPOs in Asia this year.

Foreign investors fleeing slow growth and low returns in the developed world have rushed into Asia, pumping up stock markets and snapping up shares in new offerings, which can more easily absorb large chunks of capital.

"There's a surge of liquidity created in the western world," said Naresh Kothari, president of Edelweiss Securities in Mumbai. "The belief in the recovery of their economies is not very high. A lot of this liquidity is looking for returns and the best growth is available in Asia and emerging markets."

So far this year, IPOs in Asia, excluding Japan, have totaled $100.5 billion, up from $36.9 billion in the same period last year. It's even topped the $59.1 billion raised in the same period of 2007 when share issues were booming.

According to Dealogic, China had the largest IPO in history in July, with the $22.1 billion offering of the Agricultural Bank of China Ltd. Singapore hit a new record high in October, with the launch of a $2.6 billion IPO for Global Logistic Properties Ltd.

South Korea notched its largest IPO ever in April, with the $4.4 billion offering of Samsung Life Insurance Co. Ltd. and the Philippines broke its record in October with the $537 million Cebu Air share sale.

The Indian government is selling 10 percent of its stake in state-run Coal India Ltd., part of a broad divestment plan to reduce the fiscal deficit and loosen state control over some of the nation's biggest companies. India aims to sell off pieces of state-run companies worth 400 billion rupees ($8.9 billion) this year.

Coal Minister Sriprakash Jaiswal said Tuesday that the government hopes to raise at least 150 billion rupees ($3.4 billion) from the Coal India IPO, setting a price band of 225 rupees to 245 rupees ($5.03 to $5.48) a share. The offering opens Oct. 18 and retail investors and employees will get a 5 percent discount.

That would top India's prior record, set by Reliance Power's $2.96 billion offering in 2008.

"Unlike the U.S., India doesn't have a printing press which it can use without impacting interest rates or inflation," said S. Subramanian, head of investment banking at Mumbai's Enam Securities. "It has to monetize some of its central assets."