Sebi chief hails home listing of tech cos, says markets entering new era

Views follow a stellar response to India's first unicorn IPO by food delivery company Zomato, which was subscribed nearly 40 times

Domestic capital markets are entering a new era with several new-age companies preferring to list domestically, said Ajay Tyagi, chairman, Securities and Exchange Board of India (Sebi).

“Our markets offer as attractive a fundraising proposition as any overseas market. Recent filings and public offerings reflect the maturity of our market to accept the business model of new age tech companies, which aren’t amenable to valuation through conventional metrics of profitability. Successful IPOs of such companies are likely to attract more funds in domestic markets; thus creating a new ecosystem of entrepreneurs and investors,” Tyagi said while delivering a speech at a conference organised by the National Institute of Securities Markets (NISM), an educational arm of Sebi.

The comments come following a stellar response to India’s first unicorn IPO by food delivery company Zomato, which was subscribed nearly 40 times. More companies from the startup space such as Paytm, Mobikwik, Policy Bazaar and Car Trade are expected to come out with their maiden offerings soon.

Many had feared that most of these companies would opt to list in the US, a preferred destination for new-age companies. However, investment bankers said the Indian markets offer the same pool of investors available in the US. Additionally, a home listing acts as a big boost to the brand.

Tyagi said the domestic IPO markets have matured and shown resilience to the Covid-19 pandemic. This, he said, reflects in the quantum of funds raised during FY21 and so far in FY22.

“From the number of new filings with Sebi, it is expected that the figures (amount mobilised through IPOs) will increase significantly going forward.”

The Sebi chief said real estate investment trusts and infrastructure investment trusts (Reits and Invits) are other products the market has taken a liking to.

“The products have taken off since 2017 and more so in the last two years. “In just around four years from the time since the first InvIT was listed, total assets under REITs and InvITs have grown to Rs 3.5 trillion,” he said.

Tyagi also underscored the growth of the exchanged traded funds (ETFs) and ESG-themed mutual fund schemes.

“Globally, ETFs have emerged as a popular product, and provide liquid exposure to investors on even relatively illiquid underlying assets. Sebi is examining how to increase ETF liquidity on exchange platforms and feasibility of introducing new ETF products such as corporate bond ETFs to increase liquidity in the corporate bond market,” he said.