Biggest IPOs in India-Opportunities in the Domestic Market for Startups

Introduction

The first day of trading for India's most extensive initial public offering is over.

Which company is it? What did they sell shares for? Which investors bought the most shares?

Here are some of the answers to those questions:

The biggest initial public offering (IPO) in India was Paytm, which raised $2.46 billion. In comparison to Coal India, which raised $2.05 billion and SBI cards and payments with the size of $1.39 billion.

The rush of IPOs could be great news for venture capitalists and private equity firms that own stakes in these companies -- and for the companies founders.

All about the Biggest IPO in India-Paytm

In a bid to consolidate its position in the payments business, Paytm has been on an aggressive expansion spree. In the last two years, it has acquired mobile wallet companies. It is also among the top contenders for acquiring the country's largest companies like Nearbuy, Insider and Balance.

The digital payments space is already crowded with global players like Apple Pay, Samsung Pay, Android Pay, etc. However, unlike them, Paytm is a platform that allows users to make a payment through any bank account or a mobile wallet.

In addition to that, Paytm is working with leading merchants, offline stores and restaurants across categories ranging from consumer durables to movie tickets.

Paytm Founder Vijay Shekhar Sharma was honoured, with Paytm being among the most valuable startups since its inception.

With this funding, Paytm plans to introduce several new offerings in the payments space, including micro-lending, wealth management products, and Paytm Money's launch. Paytm Money will act as a centralised platform for all financial services offered by Paytm Payments Bank.

IPO trends in the Indian Market

When the share-listing pipeline is drying up, the Indian IPO market shows signs of revival with a flood of new listings.

The momentum created by the IPOs in the last two months has drawn investors and is expected to attract more in the coming year. The current boom in IPOs is primarily attributed to new investors moving away from gold and real estate to invest in stocks.

There has been a significant rise in the IPO listing in the stock market. Several factors have contributed to this boom: startup valuations have soared, there is interest from both domestic and foreign investors, and Sebi has made it easier for startups to list on exchanges by removing some requirements, including that they have a three-year operating history.

While most Indian tech giants are already household names, many of their smaller competitors are yet to venture overseas. This year has seen a burst of activity, with more than 25 companies raising Money through IPOs.

As they continue to grow and capture market share at home, Indian startups are gearing up to compete globally.

New Policies pertaining to the IPO listing

In a surprise move that is likely to attract many retail investors, the government on Wednesday allowed the public issue of shares by companies through Initial Public Offer (IPO ) route even if they have been in operation for less than three years.

The move will benefit several ventures in operation for short periods, including those in the eCommerce and food processing sectors.

"If a company wants to come out with an IPO but has been in existence for less than three years, it can now do so," said a senior official from the Department of Industrial Policy & Promotion ( DIPP ), the policy-making body under the Ministry of Commerce & Industry.

New-generation Indian companies are embracing the internet in a big way, sparking a boom in tech startups that are changing the face of e-commerce.

These firms are attracting investment from across the world, with investors betting that their businesses will grow fast enough to transform large swathes of the global economy.

Which are the two categories of investors in IPOs?

There are two main categories of investors in an IPO - retail and institutional. The retail category includes people buying shares for their wealth accumulation. In contrast, the institutional category contains companies that buy shares to invest on behalf of other people, such as pension funds or mutual fund companies.

Investment Funds (Mutual funds / Unit Trusts): These funds pool together the money of multiple investors for investing in securities markets with a defined investment objective. Usually, mutual funds invest in stocks, bonds and money market instruments to earn returns in dividends, interest or capital growth.

Primarily Mutual Funds invest in IPO, intending to get long term capital appreciation by holding shares of companies for a more extended period than one year.

Risk is a vital factor in determining what kind of stock to buy. In general, the more risk an investor takes on, the greater will be the potential return. The danger is that you might lose all your money if the company or industry fails.

Different Types of Investors in the IPO market

There are various kinds of investors in the Indian IPO market. The different types of investors are:-

Institutional Investors (FIIs & Sub-Brokers): These investors trade on stock exchanges like NSE, BSE etc., with their own Money. They invest in the shares of companies listed in stock exchanges to make profits.

Retail Investors: These are the investors who invest through mutual funds or directly in stocks or shares. They risk their own Money for earning profits from the rise and falls of share prices.

Small Investors: Individuals invest through National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and other stock exchanges. Their main aim is to earn quick returns irrespective of the risk involved or the holding period involved.

Wrapping Up

The Indian market has witnessed a flurry of IPOs this year and is one of the few bright spots in Asia.

Paytm has expanded into lending and insurance services and claims it has more than 260 million users.

The number of companies to go public in India has grown by more than 50 per cent this year, likely reflecting a recovery in investor sentiment.