RBI says 2021 may turn out to be the year of IPOs
The successful IPOsin the recent months reflect the continued boom in the Indian technology sector, the central bank noted.
An article by the Reserve Bank of India on Tuesday said that the year 2021 could become the IPO (initial public offer) year as domestic unicorns are raising capital via the IPO route.
The successful IPOs brought by newcomers in the recent months reflect the continued boom in the Indian technology sector. The Reserve Bank, in an article on the topic ‘State of the Economy’, said, “The year 2021 could become the IPO year in India. The first offering of IPOs by Indian unicorn companies coincided with the spectacular IPO of a food delivery app that received 38x more applications. Due to these, there is a bullish trend in the domestic stock markets, while there is enthusiasm among global investors.
Beginning of a new era
The article further cites the example of a financial services app Paytm, saying that ‘IPO proposed to raise $2.2 billion by a payments and financial services app, digitization of India – digital payment solutions, e-commerce, logistics, shoes investor enthusiasm.’
“A new era has clearly begun. It is estimated that India has 100 unicorns (Credit Suisse, 2021), with 10 new ones created in 2019, 13 in 2020 in spite of the pandemic and 3 a month in 2021 so far. They do not rely on inherited wealth or dependence on bank loans or extra-business connections, but on talent and innovative ideas. These are the children of liberalisation, not of the wealthy,” it said.
Clearly, a new era has begun. It is estimated that there are 100 unicorns in India. These companies do not depend on inherited wealth, bank loans or off-business links, but on talent and innovative ideas.
Better effect of lifting lockdown restrictions
The article also said that the economy is picking up with improving manufacturing activity and moderation in the contraction in services. According to the article, overall demand conditions are improving as demand picks up after the lifting of the COVID-19 lockdown, while supply conditions are improving as the monsoon approaches its normal levels and sowing activities to pick up. Driven by a smooth liquidity position, the financial position remains benign and helps in recovery.