Indian companies, including SMEs, have raised an impressive $10.6 billion (around Rs 69,000 crore) through the IPO route so far this year. The amount raised has seen a massive increase over last year, when 83 companies raised $3.8 billion, according to an EY Report. Yet, many Indian startups do not think of public markets as an option to raise funds or to give their investors an exit.
Many Indian entrepreneurs shy away from going public because of concerns like the need to be profitable and the need for coming out with quarterly results after going public.
India’s leading stock exchange, The National Stock Exchange (NSE), is organising the NSE Tech Conclave 2017 in Bengaluru just to address some of these concerns. The event will focus on helping tech entrepreneurs and private equity investors get value out of public markets as they look to grow and scale their startups.
According to Vikram Limaye, MD & CEO of the National Stock Exchange, “The Indian economy is on the cusp of the next big leap, being driven by wide range of new age companies. The current wave of new age companies has been fuelled largely by offshore capital. However, now with the booming Indian economy and positive investor sentiment, India is strongly positioned to provide domestic capital to power the aspirations of these home-grown global companies.”
One of the biggest concerns for private equity investors in India is the low number of exits the country has provided. Over 180 Indian startups provided exits in 2016, while the number this year stood at 101 until August. In a vacuum, these numbers might seem high, but we should remember that hundreds of companies raise private equity funding each year. Last year saw over 1,000 angel and VC/PE deals getting finalised, while over 670 such funding deals were closed until October this year. Also, M&A is still the preferred exit route. Very few have opted to go the public markets route. The exit numbers need to go up and Indian entrepreneurs need to start looking at the IPO option more seriously.
Especially considering the many public markets success stories. This year has almost been a blockbuster one for IPOs. Let’s take a look at just a few recent IPOs. The AU Small Finance Bank IPO saw the Jaipur-based company raise over Rs 1,900 crore in an issue oversubscribed 54 times. Avenue Supermarts, which runs D-Mart, mopped up Rs 1,870 crore, while optical network equipment manufacturer Tejas Networks raised over Rs 770 crore. Online match-maker Matrimony had a Rs 500 crore IPO and it was oversubscribed by a whopping 441 percent on the last day of the issue!
This month saw the 100th small and medium enterprise being listed on the NSE EMERGE, an SME listing platform of NSE. A new NIFTY SME EMERGE Index was launched to track the performance of these listed SMEs to help investors benchmark the performance of these companies. According to Mr Limaye, at least 40-50 more companies are expected come on board the NSE EMERGE in the next six months.
Sectorwise, 2017 saw an increase in the IPOs coming from the Indian insurance sector due to regulatory changes, with companies such as HDFC Life which just debuted, SBI Life and ICICI Lombard, hitting the markets. In fact, the General Insurance Corporation IPO was one of the largest in recent times. Others such as SBI General, Reliance General are in the queue to go public by the end of the year.
Mr Limaye added, “As a leading exchange, it is imperative for us to provide a robust fund-raising ecosystem for these companies for addressing their next phase of funding requirements as well as enabling them to unlock their valuation potential in India.”
If you are a tech entrepreneur thinking of unlocking value for your startup, check out the NSE Tech Conclave 2017 to be held on Tuesday, 05 December from 3.00 pm, at JW Marriott, Bengaluru.
The Conclave is the event to attend to understand how you can eventually decide on listing publicly. The event features senior leadership at NSE, regulators, i-bankers, private equity investors and entrepreneurs, among others.
There are several sessions lined up to provide entrepreneurs with the information and understanding they need to decide on the best fund-raising and exit options for them.
For instance, while many entrepreneurs, especially in the tech industry, think of listing overseas, is that really the best option if a company’s market is completely in India? What types of new-age tech companies can opt for an IPO in India? What are the check boxes a startup needs to tick before going public in India?
The NSE Tech Conclave 2017 will give entrepreneurs and Indian startup ecosystem insiders answers to these and many more IPO-related questions.