Parul
Indian startups typically take 3.5 to 4 years to go public after reaching unicorn status but more than 35 mature fintech firms (valued at $500 million and above) are potentially looking for an initial public offering (IPO) in the next few years, a report said on Thursday.
In the meantime, as building sustainable companies with strong leadership, compliance and governance is crucial for IPO readiness, only 40-60 per cent of respondents feel fully prepared for an IPO, according to the report by Boston Consulting Group (BCG) and Z47 (fka Matrix Partners India). Approximately 70 per cent of fintechs listed in India experience a decline in share prices within six months of listing, the report mentioned, adding that an effective management of scaling challenges and profitability is crucial for continued value creation.
Having generated over $100 billion in value over the last decade, the Indian fintech ecosystem is in its “middle journey”. The ecosystem is poised for further exponential growth, as seen with incumbents that have created over $600 billion in value over the past 3-5 decades. According to the report, the number of fintechs in the country has quadrupled in the last four years – a three-time increase in unicorns and soonicorns in the same period. According to Vivek Mandhata, Managing Director and Partner, BCG India, the Indian fintech ecosystem is maturing with remarkable resilience, as traditional financial institutions and fintechs increasingly converge.
The penetration of financial services will continue driving growth for the ecosystem, compounding value across all categories,” added Vikram Vaidyanathan, Managing Director, Z47 (fka Matrix Partners India). B2B payments are awaiting their “UPI” moment of disruption, with an estimated $1.8 trillion opportunity in cross-border payments by 2027.
The report highlighted that India’s retail unsecured loan penetration is only 9 per cent, significantly lower than countries like the US (259 per cent) and the UK (173 per cent), highlighting substantial room for growth. Meanwhile, India’s mutual fund investor count has doubled since March 2020, from 9 crore to 18 crore, but penetration remains low (20 per cent) compared to other countries (70-100 per cent).
