Many companies have postponed plans to bring their public offers
The boom in early public offerings of technology in India risks shutting down soon after several high-profile startups in the country were listed.
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 catastrophic public debut of fintech firm Paytm as well as the overthrow by newly listed e-commerce operators Zomato Ltd and Nykaa.
The level of IPOs has increased rough New York to London and Hong Kong will begin this year amid prospects of increased interest rate hikes, geopolitical tensions and increased volatility. In India, flops have been smart as 2021 was supposed to be the coming celebration of the huge and vibrant startup sector. Instead, after investors burned out, contributing to the delay, regulators have intensified scrutiny of IPO candidates.
“Investors are no longer obsessed with household name startups; They want a path of profit and returns, not hype and hoopla,” said Anoop Jain, managing partner of early-stage investor Orios Venture Partners.
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 Jostle 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.
PayTM operator One97 Communications Ltd. on Thursday, November 18, 2021, at the Bombay Stock Exchange in Mumbai, India. Workers set the stage during the listing ceremony for the IPO. One 97 Communications Ltd., which operates India’s leading company. Digital payments brand Paytm collapsed at the start of its business in Mumbai as investors questioned the company’s valuation and path to profitability.
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.
Some said the US IPOs of startups Druva Inc., InMobi Pte. and Pine Labs Pvt. have also 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 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. The final valuation and investor interest could determine the course of technology companies’ listing plans, many said to be the “mother of all Indian IPOs”.
Sandeep MurthyA partner based in Mumbai light boxsaid concern among public market investors is intensifying after two years of “rocketing” growth.
“Last year was all about greed and, short of a foreign invasion, the market was ready to accept anything,” said Mr. Murthy. “For now the fear is haunting, but give some time, the greed will be cured.”
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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