The year 2021 has been a blockbuster for private companies. E-commerce stole much of the thunder as their valuations shot up during the pandemic. This is due to the massive demand for food delivery, video conferencing, digital tools, and online shopping. In the US and Chinese stock markets, technology companies are producing massive profits for their investors. Now it looks like India is going to join the race too.
SEBI’s new regulations, such as easier migration to the main board, decreased shareholding period, and special rights, have made IPO much more lucrative. Many see it as an opportunity for the companies to go public. Also, government incentives, booming e-commerce, rising digital demand, and expanding stock market will drive most of the Indian start-ups to take up IPO.
Taking a company public takes enormous time. Many companies take 12-24 months to prepare for an IPO. According to an investor survey by Ernst & Young, the key concerns for IPO candidates are overpricing of stock for listing, incomplete infrastructure preparations pre-IPO, not enough preparations done for investor communications, the complexity of process underestimates, limited flexibility with regards to timing, and so on. The main problem in most situations is when the stock is overpriced for an IPO. And this drives away many investors resulting in an unsuccessful listing.
Although COVID-19 crippled the world’s entire operation system, one sector that continued to move was e-commerce. They are expanding their avenues in tier-II and tier-III cities. Besides, they are also targeting global expansion. Suitable government policies, regulatory reforms, and robust demand for digital services will make India a favourable destination for the influx of funds from global investors.
In 2020, despite COVID-19, India recorded a 13% growth in foreign direct investment (FDI). This growth was attributed to investments in the digital sector. Thus, it could be said that India is indeed at an inflection point where digital transformation will witness mass adoption.