India goes on IPO overdrive

With promising and improving valuations, private equity and venture capital exits are becoming an important source for the IPO pipeline, giving rise to highly visible transactions and taking large as well as mid-market companies public. IPOs from PSUs continue to be a prominent feature. Government's plan of divesting $11bn as a part of the 2017 budget proposal, including the insurance PSU, Railway PSU and other strategic government assets/investments, has played a key role in driving the IPO volumes in India. Public listing of government-owned companies will enhance transparency, accountability and promote higher governance standards. This move will unlock a huge amount of value for the government and increase investor appetite for private sector IPOs that may follow. Fundraising through Green bonds, Masala bonds, InvITs and REITs is also likely to be a big source of capital. Securities and Exchange Board of India (SEBI), the securities market regulator in India, has been closely monitoring the IPO space and playing a significant role in enhancing the investor confidence. Apart from making it easier for the companies to now get listed, SEBI in parallel has also been firm on the stringent disclosures and tightening monitoring norms. SEBI has brought in a host of changes, gaining trust of the institutional investors, thus motivating the retail investors to make more informed investment decisions. Strong financial results and stability has encouraged the retail investors to invest in the domestic market with confidence. Majority of the companies that were listed in 2017 have yielded positive returns to the investors. As the market gathers momentum and the IPO pipeline continues to grow, SEBI remains watchful to not just make the market lucrative for the investors but at the same time strengthening entry level norms for companies planning to go public. India has experienced a series of accounting and regulatory reforms, including the introduction of the new Companies Act, Indian accounting standards (Ind-AS) aligned with IFRS, mandatory auditor rotation, tax accounting standards and internal financial control compliance requirements, amongst others. The year 2017 also saw introduction of the landmark Goods and Services Tax (GST), which promises to simplify the tax regime and enhance competitiveness. Improvement in macro-economic indicators and ongoing efforts to revitalise growth with various new initiatives such as Make in India, Digital India and Smart Cities has helped India emerge as one of the leading FDI destination in the world. US investors have ranked India as the most attractive investment destination outside of North America in 2017, per a recent EY survey.

Over the years the IPO ecosystem has matured a lot. During the IPO journey the companies are subject to increased compliance requirements, intense scrutiny by investors and analysts, and overall accountability for delivering on promises. IPOs today are about more than just raising capital. They are also about enhancing reputation, attracting talent and driving growth. Getting ready for an IPO requires extensive planning and preparation and a robust execution in order to deliver success. An integrated readiness assessment approach helps owners or managers map out the organisational changes needed to successfully execute an IPO or other capital transaction using a single, integrated approach. It helps them decide which options best fit their business strategies and objectives, delivers an IPO base case and develops the road map to enhanced value. Although the IPO event itself short-lived, the value journey begins well in advance of the IPO and continues quite beyond it. The key milestones in an IPO journey are:

Whilst an IPO should be a key turning point in the life of a company, market leaders don't treat an IPO as simply a one-time financial transaction. Rather, they recognise the IPO event itself as just one defining milestone in a complex transformation from a private to a public company.