How companies to be IPO ready?

While IPO is the most difficult route of raising fund, it's the viable route too when the founders want to keep control of the business.
IPO

New Delhi: IPO or the Initial Public Offerings lead companies to go public by listing the company names in the Stock Exchange. Recently, IndiaMART, an online marketplace that assists Small & Medium Enterprises (SMEs), large enterprises and individuals to trade with each other has filed draft for IPO to market regulator Securities and Exchange Board of India (SEBI). As per report, the company is expected to offer up to 4.28 million shares through its offer for sale, with its promoters and investors selling a portion of their stakes in the Noida based 23 years old company in the issue.

Another company, SaleBhai Internet Limited, a B2C e-commerce company also has received BSE approval for its Initial Public Offering (IPO) on SME Platform. As per the company, Salebhai had already received funding and support from 71 high net worth individuals, who had started as customers and become investors.

While IPO is the most difficult route of raising fund, it’s the viable route too when the founders want to keep control of the business.

Consultancy firm Ernst Young has found that companies with successful IPOs:

  • Begin to act and operate as public companies at least one year in advance of the IPO
  • Outperform the competition on key performance measures before, during and after the IPO
  • Companies approach the IPO as transformation process rather than a financial event or the end game.

SaleBhai’s co-founder, Vishwavijay Singh says, “There are a few regulative requirement that one has to complete before filing for an IPO. For example, your balance sheet should be BSE ready. As it has certain format to follow. Likewise, there are norms like 25% of the total board members should be women. Most startups have a CEO and no MD. It's important to appoint an MD. Also, 50% of the board should comprise of independent members.”

As per Singh, SaleBhai has filed for an IPO for growth capital infusion and majorly the money raised through the IPO will be used to achieve the company’s growth targets.

As per market experts, primarily companies looking for an IPO should consider the following:

  • Prepare early
  • Outperform competitors on key benchmarks
  • Evaluate other capital raising options
  • Address investors’ current concerns

 

 

 

 

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