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 ‘FY22 will see tech IPOs lead major markets’
September 14, 2022

‘FY22 will see tech IPOs lead major markets’

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The stellar itemizing of Zomato Ltd has created a robust buzz round tech preliminary public choices (IPOs). In a dialog with Mint, S. Ramesh, managing director and chief government officer of Kotak Mahindra Capital Co., and Sourav Mallik, the corporate’s joint managing director, speak in regards to the outlook for major markets in fiscal yr 2021-22 (FY22), and why tech IPOs will lead the exercise this yr. Edited excerpts:

Has the profitable Zomato IPO made an Indian IPO the de-facto possibility for many native tech corporations?

Ramesh: From our (Kotak Mahindra Capital Co.) perspective, we by no means had any concern as many of those companies are Indian companies and there’s no higher place to listing than in India. We had been assured that they might get wonderful valuations and response. The enterprise case was there for them to listing in India.

Additionally, we acknowledged {that a} small variety of such corporations could have a enterprise presence outdoors and have additional plans to construct a world enterprise. Such corporations could find yourself itemizing outdoors India. Having stated that, many of the new-age tech corporations are prone to get listed in India. International and native buyers appear to have a great urge for food to spend money on such corporations.

Mallik: If you happen to look again to the itemizing of Maruti Suzuki within the Indian market in June 2003 and the form of visibility a consumer-oriented firm akin to Maruti acquired from getting listed, it makes excellent business sense for new-age corporations to get listed in India.

Ramesh: Final yr ₹2.17 trillion was raised from the first market, led by certified institutional placements (QIPs) and IPOs. FY22 perhaps will see a bigger fundraise from the first market, led by the tech IPOs.

What position has market regulator Securities and Trade Board of India (Sebi) performed in easing the trail to IPO for these tech corporations?

Ramesh: Sebi as a regulator has been progressive and supportive for the itemizing of those new-age tech corporations within the nation. Earlier there was hypothesis that these tech corporations could get exported to the worldwide markets for itemizing. The Zomato itemizing and a pipeline of different tech corporations have put such hypothesis to relaxation. All of this may not have been doable with out the proactive assist of Sebi.

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Kotak has bagged most of the high-profile tech IPO mandates. Is that this a strategic course for the agency to focus extra on tech offers in not simply capital markets, but in addition within the non-public fundraising market?

Ramesh: Final yr, we expanded our group and began a extra centered digital apply. Coincidentally, we additionally had a robust pipeline of personal placement and merger and acquisition (M&A) transactions. Over time, we now have put in effort in direction of understanding these new-age corporations and in addition the buyers’ urge for food for such corporations.

With tech corporations getting better swimming pools of capital, we’ll see a pick-up in merger and acquisition (M&A) exercise. This might embrace omnichannel acquisitions. This may even fast-track such corporations to the IPO market.

Our technique can be to proceed figuring out younger founders who will foray into the start-up house.

The Thyrocare acquisition by PharmEasy and the Aakash acquisition by Byju’s level to a rising development of omnichannel-focused acquisitions by main startups. What’s your view on this?

Mallik: We expect it is a dominant development that’s right here to remain. Most corporations have come to the conclusion that India should be tackled on a number of fronts and distribution will not be going to be both one or the opposite however goes to be a mix. Whether or not it’s the tech firm buying the offline firm, or the offline corporations buying the tech corporations, it doesn’t matter who acquires whom. The purpose is that these synergies exist.

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