India's capital markets regulator, the Securities and Exchange Board of India (SEBI), has stated that the pipeline for initial public offerings (IPOs) from startups and early-stage companies remains robust, though it is closely monitoring the situation for any signs of a slowdown. The regulator is prepared to intervene with measures if necessary to ensure this vital flow of new listings is not disrupted.
Regulatory Vigilance on IPO Momentum
Speaking at a CII summit in Mumbai, SEBI board member Amarjeet Singh emphasized the importance of a continuous stream of companies going public. "We should see how we can enable that movement… so that this flow is not interrupted," Singh stated. He indicated that the regulator is watching the momentum closely and is ready to consider regulatory interventions or targeted incentives should early indicators of a deceleration emerge.
Singh's comments reflect a proactive approach to safeguard the health of India's primary market, which he described as being in "a very good space." He proudly noted that India is a top performer in global IPO volumes, a position strengthened by consistent inflows through Systematic Investment Plans (SIPs).
The Global Shift from Public to Private Markets
The caution from SEBI is set against a broader, concerning global trend. Singh pointed out a clear structural shift from public markets to private markets in advanced economies. Companies that previously sought public listings for liquidity now find ample capital available in private hands, choosing to remain unlisted for longer periods.
"Earlier the driver was to come to public market to discover liquidity… now we are getting liquidity even in the private market," Singh recounted, citing a conversation with an American market participant. This drift has led to a decline in the number of listed companies abroad, hollowing out the market and reducing opportunities for retail savers and long-term institutional investors.
So far, India has bucked this trend. "India is showing healthy growth in both public and the private side," Singh affirmed. However, he warned that this balance is delicate. If the incentives for companies to list on stock exchanges weaken, India could face the same market contraction witnessed in the West.
The Strategic Necessity of Vibrant Public Markets
Amarjeet Singh stressed that public markets are vital for transparency, governance, and accountability. Firms that stay private evade mandatory disclosure requirements, leaving investors with far less information. A shrinking appetite for listings would dent market depth and hinder India's mission to draw more households into the formal financial markets.
"The incentives to list have to be maintained," he said bluntly, framing this not as mere regulatory housekeeping but as a strategic necessity to preserve market vibrancy. The path from private to public capital must remain smooth, predictable, and worthwhile for companies.
He also highlighted several underutilized avenues for growth within the current framework, including:
- Green Bonds
- The Social-Stock Exchange
- Institutional Trading Platform (IGP)
- Shares with Differential Voting Rights (DVRs)
He described these as "underutilized regulatory frameworks" and signaled SEBI's openness to innovation, noting, "We would welcome… any new instrument which the market wants." Opportunities also abound in social finance, digital innovation, and municipal bonds.
Rising Risks for Retail Investors
The SEBI official also addressed the growing challenges faced by retail investors. He pointed to limited financial knowledge, misleading advice, and the hazards of new digital channels as significant threats. Singh underscored the regulator's burden to protect investors, stating, "We want investors to come with the right knowledge… they should be aware of what is good for them."
He specifically linked the rise of unregistered investment advisers and financial influencers on platforms like YouTube to unrealistic return expectations and poor outcomes for investors. "Many retail investors… were going to unregistered Investment Advisors or YouTubers who were promising them fantastic returns which was not realistic," he explained, reinforcing the need for strong investor protection frameworks.
