How violent will the Indian technology companies go public?

“Indian technology Internet companies will shake up the country’s stock market,” the Wall Street Journal recently described in a report the impact of Indian technology companies getting listed together this year and next. According to reports, Zomato, a local food ordering platform in India, has formally applied for an initial public offering (IPO) to regulators. The Indian version of “Ele.” is expected to raise US$1.1 billion. In addition, Flipkart, an Indian online shopping platform under Wal-Mart in the United States, as well as online payment application PayTm, and online education platform Byjus are also considering applying for an IPO. Bloomberg revealed that PayTm may launch an IPO later this year, with plans to raise US$3 billion, with a target valuation of as high as US$30 billion. It is expected to become the largest IPO transaction in India’s history.

India’s capital market grows against the trend

For a long time, energy and financial companies have dominated the Indian stock market, with few technology and Internet companies. According to data, among the top ten companies in the Indian capital market by market capitalization last year, Reliance and Tata two industrial conglomerates steadily ranked in the top two, while banking and financial stocks accounted for 50%. The only company that barely dabbled in the technology industry was Infosys. Sri Lanka, but the main business is still IT outsourcing and business consulting services.

Brokerage research institutions believe that in the “post-epidemic era,” the digital consumption habits that consumers have developed will continue after the epidemic stabilizes, and companies in the mobile payment field will have great potential. In this context, Indian technology and Internet companies may rush into the capital market from the second half of this year to next year.

The report issued by the Bernstein Research Institute believes that the new crown epidemic has added a large number of new customers to Indian companies that provide online services, and their customer acquisition costs have also been reduced by 20% to 30%, which allows them to obtain better financial performance evaluation before IPO Lay a good foundation. At the same time, although the new crown epidemic has dealt a heavy blow to India’s economy and society, the country’s capital market has generally shown a momentum of “contrarian growth”. According to the Wall Street Journal, the MSCI India Index has reached a new high since the epidemic, and the cumulative increase this year has reached 14%. The active capital market will help these so-called “unicorns” technology Internet companies to obtain more considerable valuations.

Go deep into various industries and life scenarios

According to daily observations by reporters from the Global Times, Indian Internet platforms that provide online services have seen unprecedented development during the epidemic. For example, due to the inconvenience of travel caused by the epidemic and the people’s fear of “infecting” the virus with cash, the Indian apps PayTm and Amazon online payment that have been benchmarked against China’s Alipay have replaced traditional payment methods and become the people’s daily payment of telephone bills, internet bills, electricity bills, and others. Other preferred channels for payment for purchases.

The reporter saw in the community where he lived, the number and frequency of vehicles on e-commerce distribution platforms such as Big-basket, Licous, and Swiggy shuttled back and forth far beyond the pre-epidemic level. These platforms have successively launched preferential policies aimed at encouraging online payments, which in turn promoted the further popularization of applications such as PayTm.

On the 12th, “Takeaway Brother” Sharma of Zomato platform told reporters that on average, at least 30 orders are delivered every day in southern Delhi, “weekends and holidays are more than this.” After various schools in India were closed due to the epidemic, Byjus also quickly proposed an “online relay teaching” course, which took advantage of the situation during the epidemic and became a new force in Internet teaching.

The IPO process will not be smooth

The analysis believes that after a large number of Indian technology and Internet companies go public, they will provide a “window” for cash out of foreign capital that previously “bet” to invest in the industry. According to a report released by Ernst & Young, between 2018 and 2020, various venture capital companies and private equity funds around the world have invested approximately US$93 billion in direct investment in India. Among them, the Internet of science and technology, e-commerce and other fields are the most popular ones. Investors’ favorite fields.

It is worth noting that weak infrastructure, relatively less transparent business environment, and rising nationalism and protectionist sentiments in India may also become “stumbling blocks” for the future development of the country’s technology and Internet companies.

Malik, a former official of the Securities and Exchange Commission of India, told the Global Times reporter that although news of Indian technology and Internet companies will be intensively listed recently, they should also be aware that they may face various institutional problems and problems in the process. Challenge, “The IPO process may not be as smooth as the news reports.” Malik said that according to the regulations of the Securities and Exchange Commission of India, it is almost impossible for a loss-making company to be listed on the National Stock Exchange or the Bombay Stock Exchange, and most Indian Internet technology companies are in a state of loss due to “burning money.” One is enough to break the listing dream of many companies.”

The Securities and Exchange Commission of India has been hoping to attract local Internet technology companies for IPOs in recent years, and has relaxed some regulatory requirements for this purpose, but restrictions such as financial information, tax information disclosure review, and at least three years of shareholding lock-up period still exist. In addition, when India is valuing Internet companies, the growth and market size ratings are given priority over cash flow and profit considerations. Except for a few Internet technology companies that are eligible to be listed on the main board, most companies may choose a lower threshold “innovation growth board” for IPO.