Companies Gaining Confidence To Hit the Capital Market: FM

Many high-growth companies, which have lately hesitated to come out with IPOs because of certain drawbacks in the market, are now requesting for IPOs again, said Nirmala Sitharaman

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Although many agree that early-stage high-growth companies are critical for creating sustainable economic growth and new employment opportunities in India, their requirement of a tailor-made ecosystem far surpasses the capacities of a burgeoning entrepreneurial spirit in the country and can perhaps only be met by support from the government's end, especially since a more hopeful economic climate seems to be heading our way.

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"In the last few years, we have faced challenges in creating such an ecosystem but lately our confidence in it is growing, which is triggering wider traction among Indian startups," said Union Finance Minister Nirmala Sitharaman today.

Speaking at the 47th Annual General Meeting and India Ideas Summit 2022, organised by the U.S.-India Business Council (USIBC), Sitharaman added, "Today I was happy to read in the media that many high-growth companies, which have lately hesitated to come out with IPOs because of certain drawbacks in the market, are now requesting for IPOs again."

In recent time, a host of macroeconomic factors—the Russia-Ukraine war, the US dollar-Euro parity and a dip in Rupee's value, sky-high global inflation, a worldwide funding winter, etc.—had rendered capital expensive, stock markets volatile and investors rather sceptical of high valuations of startups in India. Although a funding high induced many new-age tech companies to go public last year, their falling shares have discouraged various startups from going through with their planned (Initial Public Offering) IPO since the start of 2022. For instance, in the wake of Paytm shares consistently crashing hard this year post a major IPO in 2021, PharmEasy has postponed its IPO plans, with parent company API Holdings citing "market conditions" and "strategic considerations" as the reason.

Indicating that better times were coming, Sitharaman further stated, "The speed with which Prime Minister Narendra Modi has engaged and responded repeatedly to the ecosystem's issues has shown that the government's support is not just on the basis of policy or giving monetary assistance, but also by enabling the entire process such that these companies are treated fairly and in a facilitating manner, whether they have operations in or also beyond India."

"So I would make sure that each company is approached by one or the other institutions so that we know if they are facing any repeated difficulties in terms of fiscal incentives, treatment of their profit earning, understanding their valuation, particularly because questions were raised that many of them were overvalued even in the initial stage," added Sitharaman.