Singling out IPO companies as big cause of value destruction is not right: Jefferies' Jibi Jacob

Jibi Jacob, MD and Head of Equity Capital Markets, Jefferies India said on March 7 said it won't be fair to single out IPO companies alone as a big cause of value destruction when the entire market is down.

Speaking at Moneycontrol Global Wealth Summit 2025 at a session titled "The Upcoming Rs 5 lakh crore IPO Opportunity", Jacob said, "India's m-cap has come down from $5.5 trillion to $3.7 trillion. As the tide goes down, whether IPO company or secondary listed entities, they will all come down. Singling out IPO companies alone as a big cause of value destruction is not right."

"IPO feeds on what is happening on secondary markets. First 3 months, we saw around 8-9 IPOs, whether or not CY25 will be able to beat CY24 remains to be seen," he added.

He also said that IPO valuations are reasonable considering the kind of returns they gave in the recent past.

"If you look at top 20 IPOs, median returns are 25-28%, if pricing wrong it should be more towards negative. Pricing of IPOs are somewhat reasonable," he said.

GV Ravishankar, MD, PeakXV, said domestic institutional investors are very important in the current scheme of things.

"DIIs have become so much more important in the current scheme of things. They have a massive say in pricing. They're pushing very hard for a more attractive price. It is a good balance. I do think they bring stability now and have a much better knowledge on the ground," he said.

Meanwhile, Jacob spoke about the likelihood of a surge of new-age companies entering the market in 2025-26.

"Back in 2021-22, companies talked about achieving profitability in 3-5 years. That narrative has shifted - now, businesses are eyeing IPOs as soon as they reach breakeven in just 18 months. We anticipate that 2025-26 will bring a surge of new-age companies entering the market," he said.

Sarthak Misra, Partner, SoftBank spoke about the long journey that lies ahead post-IPO.

"I started when Facebook went public in 2012 then quickly collapsed. And that summer no IPO happened, I won't be surprised if we have something similar during this period. We all hope for excitement in next 2 quarters but it is a long journey."

"We expect a wave of consumer tech companies to emerge soon. Stock broking firms are also on the horizon—it's only a matter of time," added Misra.

Rahul Saraf, Head, Investment Banking, Citi spoke about the importance of anchor investors for an IPO.

"The real value that bankers provide is judgement on valuation, positioning of equity story and choosing anchor investors. Allocate more to anchor investors, and allocate judiciously to them even if means at a lower price. We actually recommend having the right anchor investors on the book," said Saraf.