Analysis of structural conditions affecting primary market trends

Abstract

In theory, this is expected to increase the linkage between private market activity and primary market issuances after the investment gestation period across the growth rounds. This is because, in this scenario, IPOs are becoming a very viable exit opportunity for these institutional investors, along with a separate fundraising channel. With India’s high growth potential and relatively low internet penetration statistics, there is an immense runway to expand further into the market across Tier III, Tier IV cities. How much of this can be funded by the private market, and for how long is what we feel drives the foray into the public markets. This is because every investment by a private investment fund will have a gestation period at the end of which it will want to exit. With the seemingly endless growth phase for some of these companies, sharing value creation with retail investors is unavoidable. Furthermore, there has been growing literature around the rise of Passive Index funds vs. Actively managed funds. New rhetoric has been around the outperformance of passive index funds relative to active management funds for a retail investor, especially after accounting for the higher management fee charged by the latter. New companies like Zomato and Nykaa making marquee debuts while not even being profitable opens up new avenues for actively managed and sectoral funds to invest money.