The initial public offering (IPO) market in India will likely recover in the next few months, says BOB Capital Markets (BOBCAPS) joint managing director Sanjiv Saraff.
“The IPO markets will have to come back in a few months or a few quarters. IPO market is a route to raise primary capital. You cannot take that away,” Saraff said.
“I think more than 30 issues are lined up this year. Many more IPO launches are pending with Sebi. IPO launches are subject to book building. Book building exercise means you go to investors, get the demand and then launch it. There are two things, matching of valuation expected by the promoter and the valuation expected by the investor. If that happens, IPO happens or if the matching does not happen, then the IPO gets delayed. If there is not too much liquidity at the moment, then it will be delayed. That is all.”
The IPO market has been subdued in recent months due to a volatile stock market in India and central bank actions to tame inflation.
“The IPOs may happen in any sector. It all depends on the maturity or the stage of the company that is going for the IPO. If there is somebody who is mature and wants to take advantage of the valuation that the company is getting, they can launch. I do not think anybody should wait for sector specific criteria to launch an IPO. It is the maturity and valuation expectation of the promoters, which decides the IPO launch,” he said.
BOBCAPS is a wholly-owned subsidiary of Bank of Baroda. It offers the entire spectrum of financial services that includes initial public offerings, private placement of debt, corporate restructuring, business valuation, mergers and acquisitions, project appraisal and loan syndication.
“The startup funding environment is always tilted towards ideas. There is no dearth of money for any idea which is disruptive, scalable, and where promoters are credible. Silicon Valley Bank collapse happens, fund crunch happens, that is a temporary phenomena. Ultimately, the venture capital funds or private equity funds will look forward to doubling their return on their investments. That is the reason why they invest in these startups,” he said.
Indian startups have seen a sharp fall in funding in recent months amid fears of a recession. The collapse of US-based Silicon Valley Bank added uncertainty to the prospects of these entities.
“I do not see a dearth of funds. Only debt capital cannot be a source of funding for these startups. In the next few years, there will be a lot of money flowing into Indian startups subject to what the Federal Reserve is going to do. But, there is always Indian capital. We have a lot of homegrown family offices and home venture capital funds available in India,” he said.
Broadly, Saraff expects technology, consumption, infrastructure, banking and financial services, and pharmaceutical sectors to aid the growth of the Indian economy.
