Digital IPO boom sparks reverse flipping trend: Bay Capital

India’s capital markets are seeing a major shift as digital start-ups once incorporated abroad are returning home — a trend known as “reverse flipping.”

A new white paper by Bay Capital shows that over 10 major tech firms, including Flipkart, Zepto, Razorpay and PhonePe, are now planning to relocate their legal base to India and go public domestically.

This reversal comes as the stock market has grown more welcoming to high-growth, and tech-led companies as India saw 327 IPOs raising ₹1.49 lakh crore in 2024 from just 15 IPOs in 2020. A mix of regulatory reforms, deeper investor understanding of digital models, and the rise of domestic capital has driven these numbers, the paper said.

Indian investors — from mutual funds to pension and family offices — now evaluate metrics like customer acquisition cost, lifetime value, and retention rates just as easily as traditional earnings. Market regulator SEBI’s decision to allow high-growth, loss-making firms to list, especially as the market focus is shifting from short-term profits to long-term value, has also played a big role, it said.

“Founders want to build businesses in India, for India, and take them public here. Validation no longer comes only from global markets — it comes from being part of India’s growth story,” Bay Capital said.

India shift

Companies such as Razorpay, Zepto, Flipkart, Pine Labs, Udaan, Meesho, KreditBee, and InMobi are planning to list in India after being incorporated in either the US or Singapore to attract foreign funding or eye Nasdaq listings.

This reverse flipping is creating a virtuous cycle: deeper capital markets mean better exits for VCs, which in turn fuels more early-stage innovation. Over $40-$50 billion has been unlocked through private equity and venture capital exits in the past two years.

“Reverse flipping is not a passing phase. It’s a sign that India’s capital markets, investors, regulators, and founders are aligned. India is now ready to support and scale its own digital businesses,” it said.

The country’s digital infrastructure — from UPI and ONDC to account aggregators — is enabling small sellers and fintechs to scale even faster. UPI alone processed 18.68 billion transactions worth ₹25 lakh crore in May, up 33 per cent year-on-year.

However, the report also warns that investors must look beyond labels like “AI-powered” and “digital-first”. Investors must focus on business fundamentals as what matters is acquiring and retaining paying customers, delivering value, keeping unit economics sound, executing well, and following strong governance, it said.

Published on June 3, 2025