Two of the biggest IPOs in the country that are expected this year are those of Jio and the NSE. There will be one major difference in these two issuances. The first is a fresh equity issuance where the funds will go into furthering the business of the company, while the second is an offer for sale, where essentially it is a case of some shareholders offloading their stakes in the company. This is a way of reaping value for investments made earlier and will, hence, enhance the profit and loss account for the selling shareholder companies. 

This facet is important because it has been observed over time that, as the market has evolved and matured, several promoters of companies have been selling a part of their stakes in the market. This also means that the market has been doing well in terms of reflecting valuations, though at times there is a sense that some stocks could be overvalued. One of the largest sales was that of the LIC, where the government earned a healthy sum from such a sale. While the share of public holding increases with the OFS, often the promoter sells only a part of the stake and continues to hold a significant share in the company. 

This was not the case with the start-ups, where the promoters sold almost their full stakes and probably exited the venture. Interestingly, during the stock market boom, several loss-making companies were able to leverage their ‘idea novelty’ to........

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