Will Sebi's new recommendations make public listings easier for India's internet-based startups?
Image: Deepak Turbhekar for Forbes India
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Sebi’s recommendations The recommendations that Sebi released last December aim to make the listing of internet-based ventures easier in India, and allow more Indian retail investors to participate in them. (See: Sebi’s key reforms recommendations for the IGP)****
Investor & startup sentiments****
The lure of the US According to Tracxn, there are 34 unicorns in India, as on February 4, 2021, including the likes of Glance, Paytm, BigBasket, Zomato, Swiggy, Nykaa and Udaan. Most of these are planning IPOs, regardless of the IGP’s implementation, some in India, but according to experts, most would be considering an overseas listing.****
The SPAC option Despite Sebi implementing the IGP framework, companies like Zomato or Paytm, which are eligible to list on the board, are likely to choose an overseas listing, either directly (provided regulations permit) or through the special purpose acquisition company (SPAC) route. “SPAC is a shell company with no commercial operations, which is formed strictly to raise capital through an IPO for the purpose of acquiring or merging an existing unlisted company,” explains Amitabh Malhotra, head investment banking, HSBC India. As per a recent report, online grocery delivery service Grofers is in talks to make its public market debut through a merger with New York-based Cantor Fitzgerald’s SPAC or blank-cheque firm. It is expected to raise between $400 million and $500 million, at a valuation of $1 billion. “We cannot comment on rumours. Our focus continues to remain on growth and building technology that empowers the grocery ecosystem to make products more affordable and accessible for millions of Indian households,” Grofers said in response to queries from Forbes India.