Ajay Tyagi, chairman of SEBI (Image: Reuters)
The Indian capital markets are entering a new era with several tech companies choosing to list domestically, the head of the regulatory body said.
Recent filings and public issues show the maturity of the Indian markets in accepting the business models of new-age tech companies, which cannot be valued through the conventional metrics of profitability, Ajay Tyagi, chairman of the Securities and Exchange Board of India (SEBI), said at a conference.
The success stories of the initial public offerings from these new-age tech companies will only attract more funds in the domestic market and help create a new ecosystem of entrepreneurs and investors, he said.
The maturity of India’s IPO market was reflected in the fact that companies raised about Rs 4,600 crore through initial share sales in FY21, more than double the amount of Rs 2,140 crore raised in FY20, Tyagi said. Companies have already raised Rs 1,200 crore through IPOs as of June end in FY22.
The figure is expected to increase significantly. The Rs 9,375 crore issue by online restaurant aggregator and food delivery company Zomato was subscribed 38.25 times during July 14-16. Paytm plans a Rs 16,600 crore public issue this year.
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The SEBI chairman noted that investment guidelines for real estate investment trusts and infrastructure investment trusts have been relaxed to make these instruments more accessible. Trading lots and allotments have also been reduced for REITs and InvITs.
Since 2017, when REITs and InvITs were allowed as an asset class, they have together raised Rs 90,000 crore. In the four years since their launch, total assets under REITs and InvITs have grown to Rs 3.5 lakh crore, Tyagi said.
Interest in exchange-traded funds is also increasing gradually, he said. The proportion of assets managed by ETFs to the total under mutual funds widened to 9 percent at the end of FY21 from 2 percent at the end FY16. Assets managed by ETFs almost doubled to Rs 2.8 lakh crore at the end of FY21.
Environmental, social, and corporate governance (ESG)-themed companies, which have become the focus of the investment strategy of many funds, found a place in Tyagi’s speech. According to Tyagi, there was a surge in ESG-based mutual fund schemes in India in FY21. He said the number of new fund offers with the ESG theme shot up four-fold in FY21, while the amount almost tripled during this period.
Referring to the increased investor interest in the Indian capital markets, the SEBI chairman said the number of dematerialised accounts jumped by over 34 percent in FY21, with an average of 1.2 million demat accounts opened every month compared with 420,000 a month in the preceding year.
Turnover in the equity cash market increased by over 70 percent to over Rs 164 lakh crore in FY21. Overall mobilisation through the capital markets, even in a pandemic year, increased to Rs 10.12 lakh crore, surpassing the previous year’s figure of Rs 9.96 lakh crore.