Companies going public is a big deal, and not just to the company alone but to all of the stakeholders out there. Especially the investor. The average investor has so much to take away from a company going public. You do not just get to invest in your favorite brands or stores – you will also get to make good money and move on towards wealth creation. Now, we know that companies going public do play a big role to existing investors and the investors that are thinking about investing in the stock market.
But, more than before – companies are going public now. Have you ever wondered why? This is why.
Why are so many companies going public these days?
There has been an IPO rush – ever since the year 2020. But firstly, an IPO, meaning an initial public offering – is when a private company offers its equity shares to the public to raise money from the investors to become a publicly listed company.
Now, before we go on to the new IPOs of 2021 or the upcoming IPO – let us talk about what caused the IPO rush.
By the end of 2020, the pandemic had increased some stock market activity and also businesses. The wholesome performance of the stock market had a positive impact on the companies planning to go public this year.
As the government is injecting money into the economy to combat the consequences of the pandemic, market liquidity is at an all-time high this year. The government’s capital flowed through the country’s financial system, eventually finding its way into the stock market, generating a surge in liquidity. The market’s significant liquidity has provided investors with the financial muscle to back emerging businesses and startups.
Loss-making corporations are also launching IPOs in the hopes that the bull market will entice investors to spend more money on the company.
Due to the pandemic and the convenience with which a Demat account may be opened, the number of first-time investors in the market has risen dramatically. According to a State Bank of India estimate, over 1.4 crore new Demat accounts were registered in FY 2021. This reflects the present high level of investor interest.
From a regulatory standpoint, the simplicity of applying for startups has improved as SEBI, India’s market regulator, has decreased the requirement for issuers to have 25% of pre-issued capital retained by qualified investors to one year from two. This reform has made it easier for businesses to become publicly traded.
So, what are these companies that came public in 2021? Just imagine the surge in profits they might have witnessed.
The pandemic has benefited many IT startups. To properly meet their fast-growing demand and focus on expanding their business, such businesses will need to seek additional funding. Going public helps such firms to raise a significant amount of money to support their long-term expansion objectives.
The Best IPOs of 2021
IPOs in 2021 are like Jio’s introduction for internet users. Remember how Jio had changed the way people used the internet. It was pocket-friendly internet access that most of the nation had enjoyed, and there was a surge. The same in a different time and place appears with the IPOs of 2021.
There was a sudden surge of investment through internet investments and the pandemic’s impact. The companies that went public during this time enjoyed the spotlight and the amount of success they were seeing. Some of the best IPOs of 2021 are mentioned here for you (most of them have mostly gained popularity, and you know them).
You are still mostly ordering food on this app. The online food delivery platform Zomato was also one of the most sought among the new-age businesses that had been coming up. It was met with a big demand from the market participants.
FSN E-Commerce Ventures, which runs the online beauty e-commerce site Nykaa, was another new age company that sparked interest among investors when it first launched. The company, led by Falguni Nayar, a former investment banker turned entrepreneur, raised 5,352 crores through its first public offering, which was over subscribed 81.78 times.
One 97 Communications, the parent company of digital payments startup Paytm, was already the talk of the town when it first filed its draft papers with market regulator SEBI, making it one of the most well-known platforms in the country’s payments arena. It was not only the most anticipated IPO among new firms, but it also became the country’s largest IPO, raising Rs 18,300 crore.
4. Paras Defense and Space Technologies
One of the smaller IPOs this year was Paras Defense and Space Technologies. A huge set of defense and space engineering products and solutions are designed, developed, manufactured, and tested by the firm. The primary market raised Rs 171 crore for Paras Defense, which drew a lot of attention from investors. The issue received a total of 304.26 subscriptions.
5. Laxmi Organic Industries
The initial public offering (IPO) was launched in the third month of this year at a price of Rs 130 per share. This stock was listed with a premium of Rs 156.20, a 20% increase above its IPO price. Laxmi Organic Industries’ stock is currently trading at Rs 396.45, providing investors a 204.95 % return.
With the Indian markets on a record-breaking run, investors did pile up on all of these funds. Apart from these few companies, there are companies such as Sona BLW, Power Grid Infrastructure Investment Trust, FSN E-Commerce Ventures, and more that have been performing way over the benchmark.
You might be feeling like investing in an IPO – which means that you will not get to see any proven track record. But, the truth is that you would know there is the potential for growth. Though there is the potential for growth, you need to know that research and analysis play an important role in making the decision. You cannot invest in a company just because the company is getting positive attention.
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