IPO landscape: Challenges and opportunities for Indian unicorns to go public
₹8,600 crore, that are disrupting various sectors and attracting global investors. In 2022, India added 14 new unicorns, taking the total count to 100, ranking third globally behind the US and China. However, unlike their counterparts in other countries, most of these unicorns have not gone public yet, preferring to raise funds from private sources.
This article examines the reasons behind this trend, the challenges and opportunities for Indian unicorns to go public, and the impact of their IPOs on the Indian economy and society. One of the main reasons why Indian unicorns have not tapped the public markets is the lack of a conducive regulatory environment for startups. India does not have a dedicated stock exchange for startups, unlike the US, which has the Nasdaq, or China, which has the STAR Market.
The existing exchanges, such as the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), have stringent listing norms, such as profitability criteria, minimum promoter holding, lock-in periods, and disclosure requirements, that may not suit the growth-oriented and innovation-driven nature of startups. Another reason is the high cost and complexity of going public in India. According to a report by EY, the average cost of an IPO in India is 7 per cent of the proceeds, compared to 4 per cent in the US and 2 per cent in China.
Moreover, the IPO process in India involves multiple intermediaries, such as investment bankers, auditors, lawyers, and regulators, and can take up to 12 months to complete. A third reason is the availability of abundant private capital for Indian unicorns. In 2022, Indian startups raised a record ₹1,29,000 crore from venture capitalists, private equity firms, and strategic investors,
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