Nithin Kamath | Zerodha: IPOs best way to expand capital market: Nithin Kamath – The Economic Times

Clipped from: https://economictimes.indiatimes.com/markets/expert-view/ipos-best-way-to-expand-capital-market-nithin-kamath/articleshow/87759394.cmsSECTIONSIPOs best way to expand capital market: Nithin KamathET NowLast Updated: Nov 17, 2021, 04:45 PM ISTSynopsis

“IPOs are probably the best way to expand the capital markets in the country and we need more people to get some shares allotted to them.”

“I might have a conflict of interest in saying this because these IPOs have really been helping us as a business to go expand our client base. Every time around IPOs, the account openings are just going off the roof,” says Nithin Kamath, Founder & CEO, Zerodha.

Looking at the resounding success of these IPOs, the way millennials and gen Zs have opened accounts even on Zerodha, the Sebi consultation paper does not say anything on whether the retail portion should be increased. What did you make of that?
I think there is a need for retail portion. There is a lot of demand for these IPOs and more retail investors should participate. I might have a conflict of interest in saying this because these IPOs have really been helping us as a business to go expand our client base. Every time around IPOs, the account openings are just going off the roof. So I might have a conflict of interest but I truly believe that IPO is probably the best way to expand the capital markets in the country and you need more people to get some shares allotted to them.

In the Sebi consultation paper, a very important point has been raised. Should the anchor investors be locked in for more than 30 days? In the case of Zomato, we saw 113 investors got a piece of the action when it comes to the anchor book. We have seen it with Nykaa as well and that seems to be the trend which is going to gather momentum. Should they not be locked in for 90 days, especially when the retail quota is much smaller?
I do not think anchor investors are really thinking of these investments as short term ones. So I do not know. In case of high quality companies, I do not think it will make a difference. But I have a feeling that with the surge of such large IPOs, there will be a lot of small and midsize companies who may not have as good corporate governance and who can come to the market and anchor investors can exit these companies fast. I do not think this is a concern really for large established businesses because with all the oversubscription, there is a lot of demand for these IPOs. So I do not think 90 days really makes a difference. But it is a good step forward.

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