15-20 unicorns to go public within 2 years: Kotak
What's the story
India is set to have more than 15-20 unicorns launching IPOs within the next 12-24 months, as per V Jayasankar, Managing Director at Kotak Investment Banking. He predicted that $10 billion in equity will be raised from the IPO market during this time. Also, more than 10 decacorns are likely to emerge in the next two years. Jayasankar also expects to see 20 to 30 mid-to-large size mergers and acquisitions in the coming one to two years.
Details
The funding crunch to come to an end by 2024
Jayasankar is optimistic that the 'funding winter' will soften by 2024, as public market momentum and large internet IPOs spark widespread deal-making. This follows a dip in funds invested in Indian start-ups via private equity and venture capital, which dropped to around $8 billion in 2023—about a third of the previous year's figure. Factors such as rising interest rates and geopolitical tensions contributed to this decline.
What Next?
New-age internet companies are preparing for IPOs
New-age internet firms like Ola Electric, FirstCry, and MobiKwik have submitted draft documents to the stock market regulator and are set to make their exchange debut in 2024. Currently, India is home to 112 unicorns with a combined valuation exceeding $350 billion. In 2021, 45 start-ups with a total valuation of $102.30 billion achieved unicorn status, followed by 22 start-ups valued at $29.20 billion in 2022. However, only Zepto and Incred reached unicorn status in 2023.
Insights
IPL has become a decacorn while BYJU's has lost status
As of March 2023, India had five decacorns: BYJU's, Swiggy, Flipkart, PhonePe, and Nykaa. However, BYJU's, an ed-tech platform, has faced challenges raising capital, meeting payroll, and paying off its billion-dollar-plus debt. BlackRock reduced its stake in BYJU's, cutting the implied valuation to $1 billion from $22 billion. This means BYJU's is no longer a decacorn. In contrast, IPL saw its valuation soar 28% to reach $10.7 billion in 2023, joining the decacorn club.