AUGUST 20228nitial Public Offerings (IPOs) have skyrocketed in India since 2021. An initial public offering, or IPO, is the process through which a privately held company or a government-owned entity raises capital by selling shares to the general public or new investors. The firm is listed on the stock exchange following its first public offering. When launching an IPO, the firm must register its offer document with the market regulator, the Securities and Exchange Board of India (SEBI). A complete offer document includes information about the firm, its promoters, its projects, financial data, the reason for acquiring funds, issuance terms, and so on. Zomato, a food delivery service, was the first to go public, followed by Policy Bazaar, Paytm, and Nykaa. All of these firms' stock values have plummeted following their initial public offerings, causing market players to complain that the IPOs were overvalued, leaving little money on the table for both IPO and post-IPO investors. According to Ernst & Young's Global IPO Trends Report for 2021, 2,388 IPO deals generated $453.3 billion globally in 2021, representing a 60 percent increase in volume and revenue over 2020. In India, 63 firms raised $1.19 trillion in IPOs, more than four times the amount raised in 2020 (26,628 crore). According to current trends, the IPO market will only see an increase in the number of enterprises trying to enter the market. Many big corporations, including the much-anticipated Life Insurance Corporation of India (LIC), are expected to enter the market in March 2022. SEBIs New Rules & RegulationThe market regulator, the Securities and Exchange Board of India (SEBI), has suggested strengthening disclosure rules for new-age enterprises contemplating initial public offerings (IPOs). According to a SEBI discussion paper, such companies would be forced to provide more information about how they determined the offer price for their IPOs. This strategy seeks to cover just those firms who do not have a three-year track record of profitability, while the rest of the industry's criteria remain unchanged. The announcement coincides with a sudden drop in stock values for several newly-listed tech companies following their first public offerings. Current IPO requirements, according to SEBIs discussion paper, only require businesses to publish `conventional measures' such as important accounting ratios. However, since new-age businesses are frequently losing money, the regulator concluded that further disclosures were necessary. SEBI suggested that such businesses reveal their key performance indicators (KPIs) during IPOs. Most startups anticipate income using statistical models such as gross merchandise value (GMV). Such KPIs are widely used by private equity and venture capital investors who invest in unlisted startups. "The issuer company shall disclose all material KPIs that have been shared with any pre-IPO investor at any point of time during the three years prior to the IPO", according to SEBIs discussion paper, which also states that the companies must publicise "Valuation of Issuer Company based on secondary sale/acquisition of shares (equity/convertible securities) excluding gifts, in the 18 months prior to the date of filing of the DRHP / RHP where either acquisition or sale is equal to or more than five percent of the fully diluted paid-up share capital of the issuer". To be clear, these new guidelines will only apply to enterprises that have not been profitable in the previous three years and plan to go public.EDITORIAL EXCLUSIVETHESE ARE THE EIGHT MOST ANTICIPATED IPOS OF MARCH 2022 IBy Team Startupcity
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