Public listing empowers founders to raise capital without losing control, says NSE Chief Ashish Chauhan
New Delhi, June 26
Public listing allows founders to raise growth capital without surrendering control of their businesses, National Stock Exchange Managing Director and CEO Ashish Chauhan said on Friday. He urged startups and micro, small, and medium enterprises to view public listing as a strategic tool for scaling up operations rather than a threat to their ownership.
Speaking at the JITO Incubation and Innovation Foundation's (JIIF) Foundation Day event at the NSE, Chauhan stated that public markets provide growth capital, improve governance standards, enhance credibility, and help companies attract top talent while allowing promoters to retain control.
Chauhan noted that a promoter can offer 25 per cent of equity to the market at the outset, retain 75 per cent, and dilute further only as the business requires.
"When you list, you keep 75 per cent with yourself and offer 25 per cent to the market in the beginning. You can give more later. Control stays with you," Chauhan said.
The NSE chief explained that public markets reward profitable businesses with a valuation that private balance sheets cannot match. He said a company earning an annual profit of Rs 2 crore could command a market capitalisation of Rs 40 to 50 crore once listed, giving the promoter room to raise capital, bring in partners, and expand operations.
Chauhan stated that listing gives a company its own currency, allowing a listed promoter to use stock to acquire other businesses, draw in partners, and reward staff through stock options.
Addressing concerns that listing exposes founders to hostile takeovers, Chauhan said control stays with the promoter and no change of ownership can occur against a founder's wishes. He also cautioned founders against chasing artificial trading volumes.
"Your business is in your operations, not in the share price. The stock market is only a reflection of your business; it is not the business itself," Chauhan said.
He added that share prices follow sustained growth in profit and founders should direct their energy towards operations rather than short-term price movements. He advised founders to focus on building profitable, sustainable businesses rather than being distracted by temporary market shifts.
"If you are doing a business of Rs 10 crore or Rs 20 crore, you should be planning for Rs 200 crore and beyond," Chauhan said.
The keynote comes days after the NSE filed its draft prospectus for a public offering. Meanwhile, companies on the NSE's SME platform, launched in 2012, have collectively raised more than Rs 21,700 crore and hold a combined market capitalisation of more than Rs 2 lakh crore.
JIIF Chairman Jeenendra Bhandari stated that over the past two years, the foundation successfully completed four incubation cohorts and facilitated over Rs 60 crore in startup investments. Bhandari added that the foundation secured a Rs 5 crore MSInS grant and a Rs 2 crore SISFS grant to further strengthen the innovation ecosystem.
— ANI
Reader Comments
Good to see NSE encouraging MSMEs but let's be realistic. The compliance costs and regulatory burden for listed companies are huge. Many small businesses in India run on thin margins and family management. All this talk of "improved governance" sounds great on paper but adds layers of expense. Chauhan should address how a Rs 10 crore business can afford the auditors, lawyers, and quarterly reporting that listing demands.
"Your business is in your operations, not in the share price" - this is the golden quote every Indian startup founder needs to hear. We've seen too many founders obsessed with valuation and forgetting to build actual sustainable businesses. The NSE SME platform has been a game-changer for Indian entrepreneurs. At ₹21,700 crore raised, it's proof that Indian markets support local businesses. Jai Hind! 🇮🇳
Interesting perspective from an Indian exchange leader. In the US, founders often complain about quarterly pressure from public markets. But Chauhan's point about using stock as currency for acquisitions is smart - that's how many American tech giants grew. India's SME ecosystem could really benefit if this approach takes off. Though I wonder about liquidity on the SME platform - $21,700 crore over 12 years isn't huge compared to US markets.
All this optimism is nice, but what about the thousands of companies that got delisted or failed after listing? The success stories are highlighted but failures are swept under the carpet. Chauhan should also talk about market volatility - a small business owner could see his life's work lose 50% value in a market downturn. Not everyone has the stomach for that. Let's have a balanced discussion, not just cheerleading for IPOs.
K We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.