Elections are Here. For Indian VCs, It’s Prayer Time

Most companies have been putting off a public issue due to poor investor sentiment and lower than expected valuations. And it is no secret that venture capitalists are worried sick of the lack of exits in the country.
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Come elections, India must vote decisively. For venture capitalists and technology companies in India, a lot rides on the formation of a stable government.

As we’d reported earlier, there are over 20 Venture Capital backed companies that are ready for an initial public offering. Only one (JustDial) managed a decent public offering last year.

Most companies have been putting off a public issue due to poor investor sentiment and lower than expected valuations. And it is no secret that venture capitalists are worried sick of the lack of exits in the country.

Only a strong and stable government can reverse this situation.

As of now, the state of affairs is shockingly dismal. But just how bad are we talking about? According to latest data from Prime Database, which compiles capital market data

  • Indian companies raised only Rs 1,205 cr in FY14 through IPO
  • Fundraising through the IPO route hit a 10 year low in FY14.
  • It was lower than 2008-2009, the period after Lehman Brothers collapsed.

Prime Database Managing Director Prithvi Haldea said

The market has not been IPO-friendly for last three years due to variety of factors like overall poor sentiments, secondary market volatility, promoters not getting the valuations they think they deserve, apprehensions of regulator’s views on valuations and lack of appetite for equity of big-time issuers from the infrastructure. (via)

IPO Slowdown in India

Several Indian companies like Bharatmatrimony and QuickHeal are biding their time for an IPO. Investors in these companies have also started getting jittery now.

Contrast this with the United States: over 220 companies went public in 2013. Only a handful of them were technology companies. But with the likes of Facebook, Yahoo, Google and large enterprises on an acquisition spree, venture capitalists have no reason to complain.

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