Indian primary capital markets have become deeper and have proved to be an attractive exit mechanism for private equity and venture capital investors, said panellists at an event co-organised by News Corp VCCircle.
"Initial public offerings (IPOs) were a distant dream in 1999-2000s. But things have matured from a private equity perspective in the last 20 years," said Sanjay Kukreja, partner at PE firm ChrysCapital at NSE Tech Conclave 2018.
ChrysCapital, which marked the final close of its seventh fund last year, has made 65 exits in India, said Kukreja. Of total, it exited through the IPO mode from 11-12 companies including telecom firm Idea Cellular Ltd, drug maker Eris Life Sciences and non-banking finance company (NBFC) AU Financiers. Other private equity and venture capital firms including IDG Ventures India, Sequoia Capital, CX Partners and KKR have also made exits through the IPO route in the past years.
Sachin Wagle, managing director at global financial services firm Morgan Stanley, credited the PE/VC investors in helping their portfolio companies become IPO ready.
"In many ways PE and VC investors have added a layer of finesses to their portfolio companies and hand held them to get IPO ready," he said, adding the public markets hugely changed in the past years.
The panellists said the rules are more relaxed for listing in India today though more regulations are needed to encourage more companies to go for public floats.
The ‘scare factor’ has also minimised in terms of floating an IPO among companies, the panellists said.
There is no scare factor for a company which is run well from a governance angle, said Jacob Mathew, founder and MD of investment bank MAPE Advisory Group
IPOs are also becoming attractive from the branding point of view. Besides, listed companies get fast validation of their business strategies.
Listing experiences
A Velumani, promoter and chairman of Thyrocare Technologies, said the journey towards IPO was smooth for the healthcare company because it was prepared.
"I compare IPO as a marriage. It is a process for which you need to prepare yourself," he said. While there is a belief that challenges abound for companies after the IPO due to compliance and documentation issues, Thyrocare did not find the going tough post the public issue.
Dhruv Shringi, co-founder and CEO, Yatra, which was listed on the Nasdaq in December 2016, said it listed overseas because the US market was more deeper for the company then. In the US, the market is more standardised toward institutional investors and retail investors is small, he said.
Amit Bakshi, founder and MD, Eris Lifesciences, which was listed in the domestic market last year, said he was a little afraid of listing initially from a corporate governance point of view and likely difficult bureaucratic experience.
"But it is a completely different story. Our experience has been superior. For us, governance before and after hasn’t changed but documentation has changed," he said.
