NSE CEO Advocates Public Listings for Startups and MSMEs
Public Listings as a Growth Strategy
Ashish Chauhan, the Managing Director and CEO of NSE, encouraged startups and MSMEs to view public listings as a vital strategy for business expansion. During his speech at the Foundation Day event of the JITO Incubation and Innovation Foundation (JIIF) held at NSE, he emphasized that entrepreneurs should prioritize building profitable and sustainable enterprises instead of fixating on short-term fluctuations in stock prices.
Speaking to a gathering of entrepreneurs, investors, and startup leaders at the event titled 'Compounding Bharat: Innovation Multiplied by Entrepreneurship', Chauhan highlighted the advantages of public markets, which include access to growth capital, improved governance, enhanced credibility, and the ability to attract top talent while allowing founders to maintain control over their companies. This statement comes shortly after NSE submitted its draft prospectus for one of the largest public offerings in India.
Chauhan explained that going public enables founders to secure growth capital without relinquishing control, noting that a promoter can initially offer 25% of equity to the market while retaining 75%. He stated, "When you list, you keep 75% with yourself and offer 25% to the market in the beginning. You can give more later. Control stays with you." He also pointed out that public markets tend to reward profitable companies with valuations that far exceed those achievable through private funding.
For instance, a company generating an annual profit of Rs 2 crore could achieve a market capitalization of Rs 40 to 50 crore upon listing, providing the promoter with opportunities to raise capital, invite partners, and expand operations. "Listing also gives a company its own currency," the NSE Chief remarked. He noted that a listed promoter can utilize stock for acquisitions, attract partners, and incentivize employees through stock options, referencing how Infosys founders NR Narayana Murthy and Nandan Nilekani used employee stock options to recruit talent.
Chauhan further explained that listing enhances governance and credibility, increases analyst coverage, simplifies access to bank financing, and facilitates orderly succession by easing the division of assets among heirs. JIIF Chairman Jeenendra Bhandari remarked, "Over the last nine years, JIIF has transformed from a concept into one of the community’s most influential platforms for entrepreneurship and innovation. In the past two years, we have successfully completed four incubation cohorts, facilitated over Rs 60 crore in startup investments, established a network of more than 20 ecosystem partners, and collaborated with over 30 national and regional organizations."