IPO: The Road To Riches
The slow but risky evolution of a business finding riches through an IPO is a journey well-acknowledged by industry and media alike
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For entrepreneurs and risk takers, the ultimate measure of success is a richly rewarding financial journey. In fortune’s palace, the top floors are always occupied by risk-taking entrepreneurs who want to create something big, or change the ways of an existing business operation.
The way to make it to the rich list is to start a great business from scratch, ensure a viable growth path and then take it through to one of the toughest phases of the evolution of wealth — the IPO stage. So it’s no surprise, that an entrepreneur with an innate talent of building a huge business block by block, makes it to the Super Rich list.
A business that grows reasonably fast and often requires capital to grow or which needs an exit route for some of the initial investors, often takes the IPO route. The route has both its benefits and drawbacks, but one of the perks for promoters who eventually have a successful IPO is that they get a worthy mention on the Super Rich list. Creating and nurturing a strong business that can go to the IPO stage is no easy task.
While the nature of some businesses automatically see an inherent demand, in others, the toil is hard to take them successfully to the IPO stage. In fact, there are several success stories in the global arena including that of Mark Zuckerberg who took Facebook successfully through its IPO.
India had a good year on the IPO front in 2017, which saw six new promoter families make it to the Super Rich list. Based on their sheer entrepreneurial genius and ability to scale up their business ideas, several new business owners made it to BW Businessworld’s Super Rich list. The new comers on the Super Rich list this year have that spark or two to create businesses of enduring value that have not only enriched their investors, but also themselves. Among them are investor-turned entrepreneurs like Radhakishan Damani, financiers like Sanjay Agarwal, and retailers like Sukumar Srinivas.
Topping this list is, of course, well-known investor Damani, who ventured into the world of entrepreneurship back in 2000 when he started the retailing chain D-Mart. Damani’s stake in Avenue Supermarkets, the proprietors of D-Mart, is now worth Rs 63,753 crore. Damani’s stake has catapaulted him straight to the 12th position in the Super Rich 2017 list. In fact, Damani’s Avenue Supermarket was among the most sought after IPOs which saw a huge demand and an oversubscription of 104 times its offer size.
One of the most respected and reticent investors in D-street, Damani knows a thing or two of how to create value. Since 2000, D-Mart has grown from a tiny outfit to a retailing giant with 131 stores and ever-growing same store sales. Damani started the venture with a core focus on value retailing, and since then there has been no looking back.
Among the other new comers on the Super Rich list is Sanjay Agarwal of AU Small Finance Bank. In the initial days, Agarwal ventured into the risky business of lending to small traders and entrepreneurs with a huge amount of success. But his stepping stone to success came in 2000 when the firm became a commercial associate of HDFC Bank to carry on the business of financing commercial vehicles.
The business blossomed and Agarwal soon found himself exploring the options of venture funding and taking the business public. Now, Agarwal has himself turned banker after AU Financiers received a small bank license from the RBI.
Sukumar Srinivas is a professional-turned-entrepreneur who started Shankara Building Products in 1995. Srinivas opened a retail store in Bengaluru, which focused solely on construction materials, and other construction related goods. By 2009, Shankara scaled up operations and had a revenue of over Rs 100 crore.
Over time, Sukumar saw the need of raising private equity to grow the operations, build a processing centre, and, in no time, the business grew to Rs 1,000 crore in turnover. Shankara Building Products is among the fast growing building products retailer placing Sukumar Srinivas in the Super Rich list with a fortune of Rs 2,255 crore.
A civil construction company founded by brothers Rahul and Rohit Katyal has made their promoters figure in the Super Rich list. The brothers were earlier associated with Pratibha Industries, but ventured on their own in 2012 to set up Capacite Infraprojects. The firm currently has revenues exceeding Rs 850 crore. The brothers are now collectively worth Rs 1,198 crore.
For Murugavel Janakiraman, entrepreneurship happened by chance. After losing his job post-Y2K, he ran a website for the Tamil community. Janakiraman noticed that the matrimony sections were getting the highest hits. Thus Matrimony.com was born. The business now boasts a revenue of over Rs 300 crore with Janakiraman’s fortunes taking a quantum leap to Rs 1,049 crore.