Realistic pricing crucial for successful IPOs, says expert

Mohit Gulati, a managing partner at ITI Growth Opportunities Fund, believes the IPO market will grow significantly, even as valuations adjust. He highlights that in recent years, high valuations and corporate greed have been common, but there is a shift towards more realistic pricing. Quality companies, especially in tech and fintech, are expected to lead the way, emphasizing the need for better corporate governance and communication with investors. Gulati mentions that there are about 30 to 35 IPOs approved and waiting for favorable market conditions. He predicts that between $20 billion and $23 billion will be raised through the IPO market this year. However, he stresses that companies can no longer expect to sell at top prices. The market is pushing promoters to reconsider their pricing strategies to ensure there is value left for investors. He describes the current market environment as bearish, noting a significant drop in liquidity. Major global investment funds have paused new investments in Indian startups, leading to increased selling activity. As funds near the end of their life cycles, they are pressured to sell their holdings, causing a decline in valuations. Despite these challenges, notable tech companies like PhonePe are expected to perform well in future IPOs. Gulati believes that business leaders have learned from past mistakes about market communication and the importance of corporate governance. He notes that companies must consider their interactions with investors carefully, as the market is unforgiving to those who appear reckless. Overall, the IPO landscape is shifting towards more cautious and well-prepared companies that are ready to succeed in a changing market. Gulati believes that the fintech sector and businesses focused on innovation will thrive, as long as they adapt to these new expectations.