Just yesterday, Policybazaar which is a IPO-bound company, was talking about good growth coming in and how they saw growth in the last few months of the pandemic. Have you analysed this new window which is opening up in terms of the business models on offer?
A lot of these consumer tech companies would probably be tapping the IPO market. It is not that these are new companies. Quite a few of them probably are more than a decade old. They have been trying to grow with India’s demand and India’s infrastructure. Covid has done two things: One, demand has accelerated for quite a few of these companies over the last 12 months. Another thing is the consumer’s acceptance of going online for a lot of things. We are utilising fintech models or using a B2C side. Many new digital consumer brands have come up and these are going to last and not just because of Covid.
A lot of these business models would have thought about tapping the IPO market before but they are now coming in now because it is not just about liquidity and valuations. It is also because they are now much closer to reaching a certain scale for some profitability as well as top line perspective, where they would have wanted to list in the public markets.
It is fairly exciting from a growth perspective for a lot of these consumer tech companies.
We are witnessing big dollops of liquidity coming into some of these companies. In fact just this week alone, we have seen four or five new unicorns being born. It seems big money from overseas is making new investments into Indian consumer tech plays. How are you analysing some of these companies on the valuations front?
This is very interesting and also a tough question which a lot of investors especially in the public markets would have to approach when a lot of these companies come up for listing. Now let us look at the private market itself. The rate at which unicorns are getting created in India has increased tremendously and it again boils down to the global PE. The world is also looking at the prospects of some of these technology companies a bit more closely in terms of a scale up potential.
Number two, last year India tried to focus a bit more on trying to ring fence certain geographies and certain Indian companies. The perspective here is that it does look like a gold rush. The valuations even in the private markets are seeing a lift. So there are two ways to approach it. If you look at the private market, there are a lot of mature companies with numbers of years of operation and probably decent track records in terms of the consumer base and the revenue run rate that they would have created. Their listing may be 12 to 24 months away.
So what is happening is that there is a rush for these entities. The private funds are…