With Indian start-ups now being able to easily list in India, the need for looking at overseas markets is diminishing
By Rameesh Kailasam
The Indian stock market has the potential to create extraordinary wealth for the Indian investor, thanks to the emergence of new wealth-creating start-ups, unicorns that are equally keen to list in India. The signs of a flourishing economy have always been driven by the number of people taking up entrepreneurship, and India is witnessing a similar surge with the emergence of new, disruptive businesses riding on the internet. These are also signs of a tremendous potential that exists for attracting multi-fold investments that will trigger more jobs, livelihoods and bring efficiencies, besides scale, to even existing traditional businesses.
The start-up ecosystem, combined with the ability to list in India, can lay the groundwork for creating massive wealth-creation opportunities, besides livelihood creation. It has also opened up options for new-age individual investors who seem less dividend-minded and more interested in growth stocks that support their hunger towards exponentially compounding wealth.
It is pertinent to note that global technology giants of today were once small-time start-ups, and they have created immense wealth in their respective geographies both directly and indirectly for investors and livelihood-seekers. Indian start-ups becoming unicorns have also had a manifold impact as they offer direct, indirect and gig jobs, all of which are critical for an economy like India that is seeking to create more work opportunities for its emerging adult population. If we were to look at history of developed economies, wealth and jobs came from multiple start-ups that equally enjoyed the ease of listing in their respective geographies; this also attracted global talent towards them.
India is now on a similar trajectory.
However, back in 2018, the regulatory landscape for Indian Main Board listings was not necessarily the most conducive one for internet/tech start-ups and entrepreneurs. There were significant regulatory hurdles to raise equity or undertake public offering of securities in the Indian capital markets, unlike their counterparts in other parts of the world, and encouraged companies and investors to look overseas to list. This would have meant that while Indian start-ups could tap the world for investments, the related wealth creation would also then happen overseas, based on their business performance in India.
IndiaTech.org, an industry body set up by founders of Indian start-ups and unicorns, started work in November 2018 after interacting with multiple founders on ground and seeking inputs on what they would ideally like to see change in the India listing process. The inputs that were collected over a four-month timeline led to the creation of a whitepaper on the need for India listing backed by differential voting rights (DVRs). The whitepaper strived to argue, with tangible recommendations clause by clause, why it was critical to create wealth within India while continuing to support the need for checks and balances for investor protection. The whitepaper, along with detailed recommendations, was submitted to SEBI, NITI Aayog and the government of India for further deliberations.
IndiaTech.org’s endeavour was primarily to ensure that founders who were desirous of listing in India did get the opportunity to list, grow and have freedom similar to their start-up founder counterparts in other parts of the world. For the first time the need for ‘wealth creation’ in India was also elaborately professed. When this journey began in 2019, it was clear that it would be a step-by-step process in this direction and it was believed that by 2021 India will possibly witness couple of blockbuster IPOs from the emerging internet tech companies of India. The journey then led to the discovery process that many start-ups/unicorns’ aspirations sat in multiple categories, first those who wanted normal listing, second those who wanted to use the QIB route, third those who wanted QIB plus DVRs, fourth those who wanted to list as no promoters or professional CEO listing, and fifth some who still wanted to list abroad.
This journey seemed to get ample support from the Indian media that reported positively in support of such efforts that helped establish the belief in India and to global investors that the Indian internet tech companies had come of age and had the maturity and hunger for listing in India.
This year has seen the Indian start-up story undergoing massive transformation despite the pandemic, with IPOs raining in the new unicorn land. The role of SEBI as a regulator in making this happen is appreciable and continues to be in the right direction in the light of many recently announced measures making it possible for Indian unicorns to list in India. As the number of these tech start-ups grows to become unicorns, there is a huge line-up for IPOs which is also translating into a new chapter in India’s primary markets and wealth creation. Listing has been a goal for every start-up chasing the Big Billion Dream. With the ability to list in India becoming a reality, the need for looking at overseas markets as the only option is diminishing. Start-ups have been attracting investments of $10 billion annually on an average and IndiaTech.org believes this number could touch $30-40 billion a year if such reforms continue.
While all of us have striven towards ‘ease of listing for start-ups in India’, it is also an opportunity for exchanges in India to enjoy enormous market capitalisation with thousands of listed companies in the future contributing towards wealth creation in India.
The author is CEO, IndiaTech.org