There are 5,000 odd companies waiting in the wings to go the IPO way in the near future

Investment bankers, private equity, venture capitalists, qualified institutional investors (QIBs) and mutual funds (who are labelled ‘smart money’) had to finally sit up and take notice of the average individual investors who started trading and applying for IPOs (who are often shoved under the Dumb Money umbrella in the US).

HNI huddle

India’s ultra-high-net-worth individuals worth over $30 million are estimated to rise by 58.4 per cent over the next five years, rising from 12,069 in 2022 to 19,119 individuals by 2027 (Knight Frank Wealth report 2023). Those with an asset value of $1 million and more, which was recorded at nearly 800,000 persons in 2022 will also rise to 1.65 million during this five-year period. UHNIs have to keep investing and rolling their money and IPOs are a good option for them.

The regulatory norms with respect to IPOs also changed from 1 April 2023, with margin funding beyond Rs1 crore was not allowed in IPOs. Subsequently, the ‘real’ rich (and serious investors) could apply in IPOs and get the requisite number of shares subject to oversubscription in the category. The neo-rich can apply anything between Rs2-10 lakh, while the UHNIs can apply more than Rs10 lakh. The highest number of HNI applications in any IPO was about 80,000.

Finally, the Indian markets are poised to witness initial public offerings (IPOs) worth $12-13 billion in 2024, especially if IPOs of new-age tech companies take off, informs V. Jayasankar, MD & board member, Kotak Investment Banking. “We expect India will be the fastest growing major economy in the next three years.”

According to S&P Global Credit Outlook 2024 report titled, ‘New Risks, New Playbook’, as India gallops towards becoming the top three economies in the world, fund raising appetite is reaching a crescendo. There are 5,000 odd companies waiting in the wings to go the IPO way in the near future. And at least 200,000 SMEs and start-ups aspiring to do the same. The number of IPOs are expected to grow exponentially in the next five years. The state election results declared on 3 December 2023 offered some comfort to the market in terms of continuity in governance. Now there is no stopping. As Nithin Kamath of Zerodha remarks: “What founders have to keep in mind is that an IPO is not the end but actually the beginning”.