India’s budding technology sector is facing a significant test this month as the lock-up period on $14 billion of shares sold in initial public offerings ends, prompting billionaire backers including Warren Buffett and Masayoshi Son to sell. is permitted.
The lock-up ends in November for four consumer-focused tech stocks, which have all declined in the past month. One 97 Communications Ltd, operator of payment service Paytm, and FSN E-commerce Ventures Ltd, owner of beauty e-retailer Nykaa.
A relatively new phenomenon in India, high-profile tech IPOs have met strong demand from the country’s growing flock of retail investors, and some have seen it as a success for the Indian government’s efforts to promote startups. I have seen. Market participants, however, have been more neutral on the stocks, and regulators have sought clarity on valuations and fundamentals.
“Investors are seeking more when it comes to expectations for future profitability from these businesses,” Tom Massi and Nuno Fernandes, co-portfolio managers at GW&K Investment Management LLC, said in an email.
India’s market soared to a record $18 billion in share sales for the first time in 2021 amid high demand for technical issues in the early days of a post-pandemic reopening. Overall offerings have slowed this year amid falling tech stock prices, rising rates and fears of a recession.
Paytm, which has lost most of its recent tech debuts, is now down 70% since its IPO, which was funded by global investors including Son’s SoftBank Group Corp., Buffett’s Berkshire Hathaway Inc. and Jack Ma’s Ant Group Co. was supported by. The stock may face additional pressure. After November 15, when about $4.3 billion worth of shares are unlocked.
“There is a possibility that SoftBank could take some advantage as it was an early investor,” said Brian Freitas, an analyst who published on SmartKarma at PB Fintech, owner of Paytm, Delhivery and Policybazaar. SoftBank is selling a stake in its investment. He said the ongoing multibillion-dollar share buyback.
Another Indian tech unicorn zomato Ltd. has already survived a similar challenge, with early investor Uber Technologies Inc. It exited the online food-delivery firm in August, shortly after the end of the lock-up. The stock has risen 13% since then, though it’s still down 17% since the IPO.
India’s stocks have outperformed most global peers this year, with the benchmark S&P BSE Sensex losing over 20% in the MSCI World Index. Masi and Nuno of GW&K Investments note that investors looking to exit disappointing tech stocks have other opportunities in equities as well as bonds, which are offering higher returns.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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