Aiming for an IPO? Here is the Detailed Roadmap to go Public! – SERIES 2

Aiming for an IPO? Here is the Detailed Roadmap to go Public! – SERIES 2

Initial Public offer (IPO) is undoubtedly a game changing event in the journey of a startup. As the startup progresses, it is not uncommon that ‘Going public’ becomes one of the significant long-term objectives startupreneurs consider. Although the ecosystem expanded by magnitude in the past decade by almost 55,000 startups, the fact is that the Indian startup landscape experienced more of investments than exits for the reason of running in huge losses and just a handful of unicorns are successful in going public.

Now the things have changed, digital companies have experienced a spike in popularity over the last few years, especially as the pandemic led to wider adoption of digital technologies.

2021 has been a remarkable year for the startup ecosystem as most of them are looking to get listed. Around 20 companies from diverse backgrounds have filed their prospectus between April and May in 2021. Most awaited Zomato IPO is concluded successfully with oversubscription and several others like Paytm, Nykaa, Mobikwik, PolicyBazaar, Delhivery, Ola, Flipkart are gearing up to tap public markets soon.

What made Zomato win IPO?

Timing is Everything!

  • The company has selected an excellent time to go public.

    • Firstly, there is a lot of money floating around in the system as the central bank has been pumping new money into circulation in order to minimize the dastardly effects of the COVID-19 pandemic on the economy.
    • Secondly, market sentiments are at all-time high and the stock market is seeing historic gains with bull run and the result is increase in investor’s interest.
    • Hence, this might be the perfect time for a startup to go public.
  • Change and expansion of Business model

Started and was conceptualized as a restaurant discovery and rating platform in 2008 by aggregating food menus and the contact details of the vendors. Only in 2015, it ventured into food delivery leg which turned to be the turning point and is one of its primary sources of revenue today and it launched B2B groceries platform ‘Hyperpure’ in 2018, It also launched contactless dining in 2020 amid COVID. This way it continuously worked on its business model and adapted itself to the dynamic competitive environment and placed itself on the top revealing its growth potential.

  • Easing of Process by SEBI

SEBI has worked on making it easier for startups to list in India and eased the regulatory process. There was a time when internet startups went to the US. The likes of MakeMyTrip and Yatra are listed in Nasdaq. And things were looking pretty bleak until SEBI introduced the Innovators Growth Platform and made changes to make it easy for Indian startups to list domestically.

Detailed Roadmap for an IPO:

Zomato IPO has proved that Indian markets are more open and receptive towards innovative business models. And this sets a new benchmark for startupreneurs across India and inspires many more internet entrepreneurs to go public.

Liquidity of the investment is an important advantage of going public.

So, what are the steps to be taken to make an Initial Public Offer

1. Get the Internal Approvals done

Once the management of the company is convinced that it needs to come out with an IPO, it shall require following internal approvals as pre-requisite.


  • Board Resolution: Conduct the Board Meeting to pass the resolution regarding the plan of offering shares to the public.
  • Shareholders Resolution: Call and convene a shareholders meeting for getting the nod of shareholders for various aspects related to IPO such as   
    • For fresh issue of shares
    • Amendment of Memorandum of Association (MOA) capital clause for bringing changes in the capital structure, splitting of shares to create more shares if needed, changing or removing the special management or ownership rights available to particular set of shareholders etc.
    • Amendment of Articles of Association (AOA) to comply with other stock exchange rules.
  • Bring the necessary amendments in MOA and AOA.

2. Hire an Investment Banker

An investment banker is a team of experts who helps in advising on the timing and methodology of the process and helps the company in getting the best price in the market. They conduct the due diligence and assists in drafting the legal documents with respect to IPO.

3. Change the name of the Company

Company has to go from “private limited” to “limited”. This change has to be approved by the board and shareholders, and an application has to be made to the registrar of companies (RoC) to implement it.

4. Overhaul the Board and Top Management

As per Companies Act 2013 and SEBI guidelines, the composition of the board has to be adjusted to comply with the following



1. At least 50% of BOD to be non-executive directors.
2. If chairman is non-executive, then minimum 1/3rd of Board of Directors shall be Independent Director.
3. If chairman is Executive, then atleast 50% of BOD shall be independent Directors.
4. If Chairman is non-executive director cum Promoter, atleast 50% of BOD shall be independent Directors.

5. Comply with other corporate governance requirements

As per SEBI Listing Obligations and Disclosure Requirements, the company heading towards IPO shall constitute the following committees.


  • Audit committee
  • Investor committee
  • Nomination and remuneration committee
  • Stakeholder relationship committee to be constituted if the number of Stakeholders i.e., shareholders, debenture holders, other security holders exceed 1000.

The company shall make sure that atleast one independent director of the company is part of Board of Directors of its material subsidiary. A material subsidiary means a subsidiary whose income or net worth exceeds twenty percent of the consolidated income or net worth, respectively, of the Company and its Subsidiaries in the immediately preceding accounting year.

6. Get the approval of SEBI

Next step is to get the approval of SEBI by filing registration statement which consists of all the fiscal data and the business plan of the company. It shall also declare the areas of utilization of the funds to be raised by the company through public issue.

The regulator looks at the IPO from the point of the view of the interests of the investors at large and will raise objections over any part of the plan that is not in tune with the interests of the investor and the integrity of the markets.

7. Draft the Red herring Prospectus and Issue of Red herring Prospectus

Disclosures in the Draft Red herring prospectus include details relating to the promoter and promoter group, comprehensive details on the use of the proceeds to be raised from the IPO, details of ongoing litigations of the company, its subsidiaries and the promoters and directors, latest financial numbers as per relevant accounting standards and it shall be filed with SEBI.

Once approval of SEBI is received, red herring prospectus (RHP) is to be filed and issued. Once RHP is open for investors in public, the company shall start extensive marketing of issue through mass media and by conducting road shows.

Drafting RHP takes 1 to 3 months atleast and marketing of IPO happens over 2 weeks.

8. Pricing the Issue

IPO is priced using Book built process or Fixed price and available to the public on planned date.

IPO is kept open for atleast 3 working days and not more than 10 working days. In case of Book built issues, the minimum and maximum period for which bidding will be open is 3–7 working days extendable by 3 days in case of a revision in the price band.

9. Allotment of Shares

Once the issue is closed and satisfactorily subscribed to, then the basis of allotment is finalized in the next 1 weeks’ time. Once the securities are allotted, the stock market will start trading the Company’s IPO.



Journey of Zomato from initial announcement till IPO:

Zomato was eyeing an IPO from 2017-18 but then Swiggy came along and hence it focused on turning its business model into more sustainable one from primarily being a restaurant discovery company with ad-based revenue model to Delivery and operations heavy firm.

Way Forward:

Going public often indicates a sense of confidence in operating a company. To enable the startups go public, SEBI has eased norms and approved several changes to the existing obligations for listing of Startups. India’s markets regulator plans to introduce rules that will hold the controlling shareholders of companies accountable, departing from the concept of regulating promoters, as dozens of investor-backed and entrepreneur-led startups are set to go public. It plans to move from promoter regime to controlling shareholder regime.

All these help startups to tap the public markets and run ahead in achieving their objectives.

IPO is not the end but actually the Beginning!!!

Leave a Reply

Your email address will not be published. Required fields are marked *