According to people familiar with the situation, major tech startups including Oyo Hotels and logistics provider Delhivery are pushing back their public debuts and preparing to resume target assessment. Both, backed by SoftBank Group Corp, were among the much-anticipated offerings from the country.
India’s burgeoning startup ecosystem is facing a reckoning, just weeks after closing a record year for IPOs. Investors have soured on new tech offerings after the fintech firm’s calamitous public debut Paytm, as well as newly listed e-commerce operators Zomato Ltd. and the one obtained by Nykaa. Regulators intensified scrutiny of IPO candidates after investors got burned, leading to delays.
“Investors are no longer obsessed with household name startups; They want a path of profits and returns, not hype and hoopla, said Anoop Jain, managing partner, Orios Venture Partners, an early-stage investor.
An Oyo spokesperson said by e-mail that it is standard procedure for the regulator to seek clarification of the initial IPO filing, adding, “Our bankers are actively engaged with them. We cannot comment on specifics.” Delhivery declined to respond.
The owners of Delhivery have pushed back their nearly $1 billion IPO for the fiscal year beginning in April, some people asked not to be named, as the details remain private. People said Delhivery is also reviewing its listing plan following the stock market regulator’s displeasure over its plan to sell substantial shares by investors in the IPO. The logistics startup backed by Carlyle Group Inc. as well as SoftBank had previously planned to list by March.
Oyo, which came under scrutiny for its ownership structure and huge losses after filing initial IPO documents last year, is now facing regulatory questions as well. India’s watchdog has raised questions about Oyo’s ongoing lawsuit with hostel operator Zostel Hospitality Pvt, which is claiming a stake in the company after a failed merger in 2016.
The approval of the draft prospectus for Oyo’s $1.2 billion IPO is pending for nearly five months. Its investors include Sequoia Capital and Lightspeed Venture Partners as well as SoftBank.
Oyo’s management and bankers, formally called Orawell Stages Ltd, are in no hurry, however, said one of the people. The person said that they are deliberately taking their time to answer questions from the regulator to slow down the listing process.
Also up in the air are the IPO timings of the pharmacy, which is run by API Holdings Ltd., and automobile marketplace Droom Technology Ltd., which filed initial IPO documents in November. Pharmacy’s investors include Prosus Ventures and TPG, while Droom is backed by Beenext and Lightbox Ventures.
Spokesmen for the pharmacy and Droom declined to comment.
Rush, India’s first tech IPO, marked an important year of exit for global investors in 2021. Paytm’s parent company, One97 Communications Ltd., raised a record $2.5 billion when it went public in November. But its shares have fallen 60% from their IPO price, angering investors and raising concerns among regulators. Widespread fall in tech stocks in India and beyond has only added to the gloom.
Even the US IPO of startup Druva Inc., InMobi Pte. and Pine Labs Pvt. Some said that has been postponed or postponed to the second half of 2022 or later. Sunnyvale, California-based software-as-a-service provider Druva, Singapore-based mobile solutions startup InMobi and fintech Pine Labs were all established in India, where they still have the bulk of their operations.
A Druva spokesperson said by email that “the company will continue to monitor market and industry conditions and will best position Druva for future growth and success.”
InMobi and Pine Labs did not respond to requests for comment.
Hanging on the Indian listing is a big unknown: the fate of the massive public share sale of state-owned Life Insurance Corporation of India, which filed its draft prospectus over the weekend. Final valuations and investor interest could determine the course of technology companies’ listing plans, many said to be the “mother of all Indian IPOs”.
After two years of “rocket” development, Sandeep Murthy, a Mumbai-based partner at Lightbox, said concerns are increasing among public market investors.
“Last year was all about greed and, short of a foreign invasion, the market was ready to accept anything,” Murthy said. “Right now, the fear is building up but give it some time, the greed will return immediately.”
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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