INSUBCONTINENT EXCLUSIVE:
Several big startups have lined up ambitious plans to come up with IPOsThe market for initial public offerings (IPOs) in India is turning
into a feeding frenzy.The amount of money raised in IPOs this year has reached $8.8 billion, already surpassing the totals of the past three
years though it's only August
At the current pace, 2021 would exceed the all-time record of $11.8 billion
Founders, bankers, lawyers and advisers are racing to cash in on fervent demand for fresh public offerings.The catalyst, in a word, is
Zomato Limited, the food-delivery startup went public in July and, despite deep losses and mediocre prospects for profitability, shares have
soared more than 70 per cent
That has fuelled the idea that similarly profit-challenged startups could find a strong reception from investors.Oyo Hotels - Homes Private
Limited, a long-troubled lodging giant, started work last week on its draft prospectus and aims to file in October, according to people
The ride-hailing leader Ola and fintech startup Pine Labs Private Limited have also begun talks with investment bankers, according to other
people aware of the situation.“India is definitely the star of the show – that is the new phenomenon,” said Udhay Furtado, co-head
of Asia equity capital markets at Citigroup Inc., the lead foreign bank in Asia IPO league tables so far this year
“Zomato really opened people's eyes to India and now we have all these privately funded unicorns coming to the public market.”The
performance of recent IPOs, such as Zomato, has fed the enthusiasm
Newly listed Indian stocks are beating the benchmark Nifty 50 Index by more than 40 percentage points this year, the biggest gap in seven
years. The country's three most valuable startups are all considering or planning IPOs
Paytm, the country's leader in digital payments, filed its preliminary offering documents, aiming to raise as much as 166 billion rupees
If it reaches that level, the IPO would be the country's largest debut ever, eclipsing the more than 150 billion rupees raised by
state-owned Coal India Limited.Flipkart, the Indian e-commerce giant controlled by Walmart Inc., is aiming for an IPO as soon as the fourth
quarter, Bloomberg News has reported
Byju's, a digital education startup valued at $16.5 billion, is in early discussions about an IPO and bankers are encouraging the company to
take advantage of the red-hot market, according to people familiar with the matter.Byju's is in the midst of absorbing several substantial
acquisitions and is likely to hold off on any listing for at least a year.Such is the hysteria that PhonePe, a payments startup Walmart
acquired as part of its Flipkart deal, is considering shifting its incorporation back to India from Singapore to capture local investor
attention, according to two people familiar with the matter who did not want to be identified
The regulatory upheaval in China has also sent investors looking for promising opportunities in countries with more predictable government
policies.“If global investors have to pick an emerging market, the balance is tilting in India's favor after the regulatory action in the
China internet ecosystem,” said Pankaj Naik, executive director and co-head, digital - technology at consultancy, Avendus Capital Pvt
“India may not be as attractive as China in the broader economic sense but it's looking like a safer bet.”Oyo Hotels, PhonePe and Pine
Labs did not respond to emails seeking comment.India's success with startups has long lagged beyond that of the U.S
But this year has been something of a breakout
With the Covid-19 pandemic, many consumers have turned to online services for grocery deliveries and other e-commerce, along with math
tutoring and medical diagnoses
Revenue has surged.Global investors like Fidelity Investments, KKR - Co
and Singapore's Temasek Holdings Pte have pumped money into India, while China's crackdown on private enterprise has spooked financiers
The value of venture investments in India reached $7.9 billion in July, surpassing China for the first time on a monthly basis since 2013,
according to researcher Preqin Ltd.That kind of financing has helped India build a substantial blessing of unicorns, startups worth $1
There are more than 35 such companies, led by Byju's, Paytm and Oyo, according to CB Insights, suggesting dozens more could go public in
Whereas the biggest IPOs of the past were conglomerate or state-backed companies like Coal India, startups are now leading the surge."Many
of India's technology unicorns have huge growth opportunities ahead of them," said Devarajan Nambakam, a managing director at Goldman Sachs
in Mumbai. "Everything is relative and given the vast opportunity, India's macro fundamentals, political stability and overall investment
policies make it one of the better destinations for global investors.”Investment banks such as Goldman, Morgan Stanley, JPMorgan Chase -
are at the forefront of multiple discussions, the people said
Mumbai-headquartered Kotak Mahindra Bank's investment banking team is also part of several of IPO conversations, the people said. Oyo, a
SoftBank Group Corp.-backed startup with a history of troubles, is one of the more surprising IPO candidates
The hotel-booking company, run by 27-year-old Ritesh Agarwal, botched a global expansion with overly aggressive targets and then was
hammered by the Covid-19 pandemic
Last year, it cut its workforce, furloughed thousands and slashed compensation and marketing as it retreated.But the brutal overhaul
allowed Oyo to survive as people stopped traveling and now bookings are recovering in Europe, the U.S
Mr Agarwal, in an interview with Bloomberg TV, said the coronavirus pandemic hit Oyo like “a cyclone” with business falling 66% in 30
days.But the company made difficult changes to focus on the technology and services most valuable to its hotel partners
The startup recently secured a $660 million debt financing from global investors to service its existing loans.Work began this week on Oyo's
draft prospectus with the goal of filing with regulators within the next 10 weeks, said a person familiar with the developments
Two banks, Kotak and JPMorgan, have already been selected and Citi is close to being added to a lineup that's likely to grow
The timing, size and blend of primary and secondary shares have yet to be decided, multiple people said. Mr Agarwal declined to comment
specifically on IPO plans in his interview.“We are already operating like a public company, when we go public is up to the board,” he
said.If Mr Agarwal does test the public markets, he will have plenty of company
Beauty retailer Nykaa filed its initial offering documents this month for a share later this year
API Holdings, the owner of the country's largest online pharmacy PharmEasy, is targeting an IPO of more than $1 billion with plans to file
initial documents by mid-October, according to people familiar with the matter. Pine Labs, a fintech startup that operates in India and
parts of Southeast Asia, is being courted by bankers who claim it could reach a $10 billion valuation, according to a person with knowledge
It was last valued at $3 billion, according to CB Insights.“Indian public market investors have shown that they do indeed value the role
of disruption and growth,” said Vani Kola, founder and managing director of the venture firm Kalaari Capital. “We will see hundreds
of such IPOs over the next decade.”
