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Its raining Unicorns in the market

ET recently reported that Softbank-backed Oyo Hotels & Rooms has shortlisted investment bankers to raise a billion dollars through an IPO. 

The question to be asked is :  With the pandemic still hanging on our head and a majority of adults in the country -- and the world -- yet to be vaccinated, and columnists writing epitaph for business travel, is this the timing right. 

The answer is to be found in a recent investment by Microsoft, valuing them at over $9 billion. Clearly they know something that regular investor doesn't.  The growing queue of start-ups waiting to list has not only added glamour to the market, but also forced investors to reassess their methods for valuing companies. Several of them are loss making and their dazzling growth is fueled by burning cash.

With several companies lining up to raise funds and with more than 50 companies achieving the unicorn status of hitting $1billion in valuation, SEBI’s rules will ease the path for these companies to get listed.  These unicorns entry into primary markets has also raised questions for regulators since many of these companies are not backed by promoters, a traditional concept in India with its long history of family-backed businesses. 

To reflect this changing market reality, the Securities and Exchange Board of India has announced a slew of relaxations such as moving away from the traditional concept of promoters to ‘controlling shareholders’, relaxing the share lock-in period for promoters of newly listed companies, easing disclosure norms and making it easier for companies to reward employees with shares.



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