With a strong momentum in India’s primary market, there is tremendous interest from companies across sector looking to raise capital in the near future.
The amount of money raised in IPOs this year in 2021 has crossed $8.8 billion, surpassing the total amount raised in the previous three years. While the IPO wave continues in India, experts believe organizations need to carefully review its IPO readiness, its processes, systems, and overall preparedness to operate as a public company.
Against this backdrop, The Economic Times & SS&C Intralinks organised a virtual discussion titled- ‘Going Public- Blueprint for a successful IPO’, that brought together key representatives from various sectors.
SS&C Intralinks is a leading financial technology provider for global dealmaking, alternative investment, and capital markets communities.
Pre IPO Readiness
The IPO journey can be broken down into three phases that is the preparation, the execution and the listing phase.
Veenit Surana, Associate Partner, Ernst & Young Associates LLP informed that the first question that companies should ask is whether going for an IPO the right decision or whether alternative sources of funding can be tapped into. “The company should be ready with the three-year track record and getting the financial documentation in place,” he said.
The other elements that the company needs to take care is to ensure the corporate elements are in place, the appointment of the independent directors, bringing together the legal diligence for putting together the right entity structure, the capital, and the tax implications structure because of it. The entire process may take around 5- 6 months.
Legal Things That Need To Be Kept In Mind
The expectation from the market regulator when companies file their draft document is that of completeness.
Yash J. Ashar, Partner, Head-Capital Markets, Cyril Amarchand Mangaldas informed that India is probably the only market in the world where the first filing with SEBI, is a public filing. “All your documents are reviewed as a whole and so all your legal and governance issues have to be place,” he explained.
The regulator also investigates the way the capital in the firm is build up from the time the company has started to the time, the company files for listing.
Need To Be Ready In Terms Of Compliance
The boom in the IPO market has also increased the aspirations of a lot of companies in the Tier II and III cities to monetise their efforts of the past, however they need to be prepared to deal with the compliance issues.
Abhijit Tare, MD & CEO, Motilal Oswal Investment Advisors Ltd explains that going the IPO route is like undergoing metamorphosis. “The compliance cost goes up as the entire legal framework needs to be set up. All these things need to be worked out,” he informed.
Emerging Opportunities In The Market
The liquidity in the market has led to the constant need from the fund managers and investors to come out with new ideas and better products.
Satyen Shah, MD & Head, Investment Banking, Edelweiss Financial Services informed that a lot of new age companies were not active on the Indian markets and were unaware of the kind of opportunities it had to offer them.
“It was always perceived that would the Indian markets be mature enough to rightly value companies that are not yet marking profits, but we have had a few successes that we have recently seen in the market,” he said.
This article has been written by Amit Shanbaug from Times Group.