How And When 2021 Became India’s Year Of IPOs?
The IPOs have been possible in India because of the bullish attitude of the investors who have invested in the Indian start-ups. In the first nine months of 2021, the IPOs of India were valued at $9.7 billion which has been the highest in two decades.
The domestic stock market of India has witnessed plenty of Initial Public Offer (IPOs) this year. In fact, according to a report by Ernst & Young, India has become a top destination of IPOs, thanks to the IPOs that it has been rolling out this year, back to back. The IPOs have been possible in India because of the bullish attitude of the investors who have invested in the Indian start-ups. In the first nine months of 2021, the IPOs of India were valued at $9.7 billion which has been the highest in two decades. However, India still has to do plenty if it wants to compete with the global stock market. According to another report, the global IPOs amounted to 1,635 this year in the first eight months. The IPO volumes in the globe rose by 87%.
US Witnesses Highest Number of IPO Deals
This year, many companies and start-ups have decided to go public which is good for the economy. This will bring an added income to the economy, in addition to other initiatives of the government like Bodoland Lottery and Lottery Sambad which are launched by the Indian government to boost the financial segment of the country. 17 IPOs were rolled out in the first quarter of 2021 in India followed by seven IPOs in the second quarter. In the July-September period, 11 companies belonging to the SME market segment made their debut this year.
If India is compared with the previous performances that it has showcased in the IPO rollout, India is doing good. However, if the comparison is made on a global scale, India is still far lacking behind. Currently, the USA tops the list of IPOs, followed by Shanghai in China and Hong Kong. Other cities that have been doing wonders by rolling out IPOs include Shenzhen, London, Korea, and Sao Paulo.
Why The Sudden IPO Boom In India?
The number of IPOs that India has seen this year clearly indicates that India is seeing an IPO boom. The India IPO index is seeing an all-time high and it will give the investors a return of 103.12 percent. Data have indicated that tech start-ups in India are particularly doing extremely well in the local IPOs.
Research and reports have indicated that the IPO boom in India can also be attributed to the regulatory framework that has made it easier to apply for IPO. Foreign investors are particularly very interested in investing in Indian startups, both as public and private investment and this helps the start-ups to leverage the opportunity to grow.
To make it easier for the companies to file for IPO, the Securities and Exchange Board of India (SEBI) has relaxed plenty of rules that have ultimately made it possible for start-ups and other companies to get listed on Indian exchanges. For instance, SEBI has reduced the time duration from two years to one year for the early-stage investors who need to have 25 % in the pre-issue capital. In addition to that, discretionary allotments and issue sizes have also changed.
Unicorns Boom In India
In 2021, plenty of Indian companies also became unicorns. The current valuation of Indian unicorns is approximately $168 billion, bringing India on the global platform to become the third-largest unicorn ecosystem, only after the United States and China. Again, tech start-ups top the list of the unicorn boom in India. The tech start-ups are particularly drawing the interest of the investors due to the pandemic forced lockdown where the importance of the digital ecosystem and platform was realized. The rise of digital payment has also further pushed the tech companies on the unicorn list. The same is indicated by the fact that this year, seven fintech companies have already made it to the list of unicorns.
The pandemic acted as a catalyst to win the confidence of the customers to the digital services. Further, many companies have moved online, and also, e-commerce sectors came running when the retail stores were shut down. Internet-driven businesses are winning the trust of both the investors and the customers and therefore, they are managing to do well. An interesting point is that most of the current unicorns are still burning cash and they are not yet profitable and therefore, the real performance is still not visible and hopefully, it will be visible in the near future.
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