The Initial Public Offerings (IPOs) 2021 was declared historic and it is anticipated that 2022 will be following the footsteps of 2021 IPOs. According to a report by Axis Capital, there are approximately 75 companies that are in the IPO pipeline. 37 of these companies have valid observations from Sebi while the others are waiting for the market regulator’s go-ahead. Ravi Kumar, Co-Founder of Upstox while commenting on the same said that the start-up ecosystem of India is already the third-largest in the world and the growth is here to stay. He further added that the trend of attaining unicorn status which was seen in 2021 will continue in 2022 too.
The most anticipated IPOs of 2022 include Life Insurance Corporation of India (LIC), Byju’s Ola, and Delhivery, a logistics company similar to GATI. It is expected that the IPO size of Delhivery will be approximately INR 50 billion. In the last few years, owing to COVID-19, there was a huge growth in the e-commerce sector and along with e-commerce, the logistic sector of the country flourished too.
2022 will be another year of huge IPOs 2022 for the following reasons.
Most of the companies that went for IPOs in 2021 had a tech component. Interestingly, the companies that are planning to have IPOs this year, also have a tech component attached to them. Many investors, including both domestic and international investors, have recognized that technology plays a key role in the growth of any company. In addition to that, another fact that is being taken into consideration is that scaling takes place in such companies earlier than the profit part comes into play. The maturity of the tech companies will result in another IPO boom in India this year.
The IPOs that took place in 2021 will have a cascading effect on the coming years. The IPOs that have increased at an appreciable level will create positive feedback, The success stories of different IPOs will also play a vital role in taking a risk with the IPOs in the future.
In 2020, the amount of money that was pumped into the Indian ecosystem was more than $10 billion and in 2021, it was more than $26 billion indicating that the Indian market has more capital now. The influx of money might slow down but the upward growth that the money investment started is here to stay. Currently, there is a massive potential in the Indian market in terms of opportunity, size, and scale.
A report by Paytm Money indicated that 27% of the Zomato shares investors were under the age of 25 and 60% of the investors were under the age of 30 indicating that a new set of investors, young investors are emerging in the market. A new group of investors emerged as a result of the digitization and growth of fintech.
With the Make In India program, the Indian government is showing full support to the Indian start-up ecosystem. In addition to that, the Indian government is also organizing events like Innovation Week for helping the Indian start-ups and developing an entrepreneurial spirit amongst the youth. The most anticipated IPO this year is that of LIC and the Indian government is planning for an allowance of 20% of foreign investment in it.
Last year, India saw around 65 IPOs and more than INR 1.31 trillion was raised. Interestingly, most of the IPOs got oversubscribed. In 2021 the investor interest was high on the Indian startups and this resulted in the huge success of many Indian start-ups. Especially the oversubscription indicated there is a huge potential for such a boom in 2022. Even though it is difficult to say the scale of the IPOs that the Indian market will see, it is for sure that there are numerous IPOs that are on the pipeline and these are big IPOs. Further, SEBI has made changes in the filing of IPOs which has made it start-up friendly. Even though the potential for IPOs is huge in 2022, the IPO size is expected to be reduced with a realistic valuation of the start-ups.
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