What does it take to pull of an IPO?
21 Years: The average age of a company that has successfully pulled off an IPO in the last 18 months.
Venture Intelligence analyzed the 32 companies that went public (on the NSE/BSE main boards) in the 18 month spanning January 2018 to June 2019 - to find common characteristics, including in their financials and their industry spread.
Manufacturing companies (led by auto ancillary, defense equipment and chemicals makers) accounted for 14 IPOs (44% of the total), followed by Financial Services (19%) and Engineering & Construction (13%) companies. Only two IPOs in the last 18 months (that listed on the BSE/NSE main boards) have been from the IT industry: Enterprise Software firm Newgen Software Technologies and IT Services company Xelp (which raised just INR 23 Cr). Also noteworthy is the fact that two Enterprise Technology companies - E2E Networks (backed by Blume Ventures) and SoftTech Engineers (backed by Rajasthan Venture Capital Fund) - pulled off IPOs (raising less than INR 25 Cr) on the SME exchanges in 2018.
A look at the financials of the 32 companies revealed the following stats:
Here is how the distribution of financial numbers look like:
With Median Revenue requirement of over INR 1,000 Cr and over INR 100 Cr in PAT, the bar for IPOs on the main board exchanges is clearly quite high. Given this, it looks like domestic IPOs are likely to emerge as a good exit route mainly for Venture Capital investors in B2B, SaaS and Enterprise Technology companies. Especially ones that achieve reasonable scale and demonstrate 2 - 3 years of profitability.
However, it is not clear whether the domestic public markets will develop an appetite for loss-making consumer oriented startups. What do you think?
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Venture Intelligence is India’s longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.
