Zerodha's Nikhil Kamath wonders about retail investors' appetite for 'next round of startups that IPO'; here's why

Zerodha co-founder Nikhil Kamath, who keeps giving his insights about stock investments and wealth management on Twitter, in a recent tweet wondered if retail investors would opt to invest in the next round of startups that go for initial public offerings. He noted that retail investors have largely underperformed in the last few rounds of startups that have gone public.  

In his post on Twitter, Nikhil asked netizens what would retail investors buy during the next round of IPOs by new-age tech firms. He noted that Zomato has the highest amount of retail money at present and he wondered if retail investors buy what they know.

"Retail investors in startups have largely underperformed; what do you think the appetite will be for the next round of startups that IPO? Do we buy what we know, Zomato has the highest amount of retail money, and we order food more often than insurance/cars/cosmetics...," he tweeted on December 9.

In his tweet, Kamath shared a pie chart curated by InvestyWise, which showed data on major startups that have gone public and their share of retail investors.

As per the pie chart data, Zomato had the highest amount of retail money and retail investors. Till September 30, 2022, the company boasted 17,99,257 retail investors, who had 6.12 per cent stake in the company. Their holdings were to the tune of Rs 3,389.9 crore, as of December 6.  

Homegrown payments app Paytm parent One 97 Communications was second on the list with 11,04,571 retail investors on board, who owned about 6.37 per cent stake in the company as of September 30, 2022. Their holdings were around Rs 2,126.4 crore as of December 6.

The Paytm parent company recently said it may go for a share buyback in a board meet on December 13. The company came under pressure a few weeks back when its investor Softbank launched a block deal to sell shares worth around $200 million after the lock-in period for pre-IPO investors ended. SoftBank owns 12.9 per cent of Paytm, and said it plans to sell 29 million shares or 4.5 per cent of the fintech company.

One97 Communications’s journey in the stock market has been choppy. The stock has lost 65 per cent at price band of Rs 2,080 to Rs 2,150 per share since its IPO launch. Paytm debuted on the bourses on November 15, 2021, after raising a whopping amount of Rs 18,300 crore. It is currently trading at Rs 544.75 on BSE.

Earlier this week, Kamath shared an infographic that claimed that retail investors have a far lesser impact on the Indian stock market in the country. Kamath said that the impact of retail investors is smaller than most think. Citing a BQ Community research note, which highlighted that the Indian-listed firms are majorly owned by private promoters and foreign investors, he said that retail investors' ownership is also lower than mutual funds, but higher than government and insurers.

The pie chart showed that private promoters in India owned around 45.13 per cent of Indian-listed companies, followed by foreign institutional investors (FIIs) who have around 20.15 per cent ownership, making them the largest non-promoter shareholders in the Indian market.

The data revealed that mutual funds owned around 7.75 per cent, while retail investors held just 7.42 per cent of the domestic market. The government had around 5.48 per cent, insurers around 4.99 per cent, LIC at 3.83 per cent , others at 3.16 per cent. The high net-worth investors had 2.09 per cent holding in the Indian market.