The magic of new-age offers & Sebi on new IPO norms

The year 2021 was one of the most remarkable years for the primary markets. Nearly Rs 1.2 trillion had been mopped up till early December by 66 companies, beating the previous best of Rs 74,035 crore seen in 2017.
New-age companies including Paytm, Zomato, and Nykaa raised approximately Rs 46,800 crore of this amount, cornering approximately 40 per cent of the fund raise.

While Zomato started the trend of new-age firms debuting on the India bourses, it was Paytm that launched India’s biggest-ever IPO worth Rs 18,300 crore.
Policybazaar, Nykaa, Nazara Technologies, CarTrade Tech and Easy Trip Planners were some of the other companies that followed suit.

Going forward, about 16 new-age start-ups are lined up to go public including Oyo, Snapdeal, Ola, Mobikwik, PharmEasy, Ixigo and Delhivery. However, the road for these companies will not be as easy as their predecessors.

Since the appalling investor response to the initial public offer of Paytm, new-age companies have decided to re-assess their IPO sizes and valuation.
MobiKwik, for instance, delayed its IPO after Paytm’s listing debacle. While cautious market mood was one reason, the company decided to wait for its December financial report to back the valuation it seeks.

On its part, markets regulator Sebi earlier this week approved changes to preferential allotment norms on pricing, and lock-in period for anchor investors in an IPO.
Here is Ambareesh Baliga, an independent market analyst with his views on the latest Sebi move.

As regards the performance at the bourses, except Zomato whose shares have done well since listing, majority of the new-age companies have seen market-cap erosion.

So why have the secondary markets been unkind to the new-age companies?

This uncanny market response to new-age tech companies across the globe caught the eye of Zerodha founder Nithin Kamath, too, who took to micro-blogging site Twitter to caution investors against the mad rush in these companies.

Baliga adds that the discouraging stock market performance can also potentially create roadbocks for further fund raising by these start-ups.

On Thursday, markets are likely to remain range-bound in the backdrop of the expiry of futures & options contracts for the December series. It will be the last monthly F&O expiry for the calendar year 2021. Stock-specific action, however, is likely to continue.

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