11/30/2023 0 Comments Recent ipos tech![]() ![]() It is also not just about being profitable companies would have to show they can expand profitability and thus I think it is an 18-24 month journey for most before they can go public,” Kumar adds. “So now these companies are focusing on accelerating this timeline (profitability) and looking to achieve profitability first rather than going public. Many companies that filed IPO papers or were close to filing IPO papers realised that they will take at least three years to achieve profitability,” says Ashsish Kumar, Managing Partner at Nandan Nilekani’s Fundamentum Partnership, an investor in Pharmeasy. “Companies can’t say that I will show profitability in the next three years and attract public investments, which probably was the case 18 months back (when Paytm etc IPOed). Industry experts believe that these tech IPOs are still approximately 18 months away, indicating that further preparations and adjustments are necessary before going public. This realisation, along with the fact that public investors gauge businesses on different metrics, prompted many companies to reassess their strategies and shift their focus towards aligning with the metrics valued by the stock markets. But people had a bad experience, so now similar excitement will take time,” he adds. “This was the first batch coming from the startup space and so there was euphoria around it initially. ![]() You take the case of Nykaa, Paytm, many other companies… regular exits are there and that’s why you are not getting back the price and that is also worrying investors,” says Prabhakar. Even after listing, these PE investors are regularly exiting. “The concept of PE exits is something that investors did not like. “When a PE investor wants an exit, he is going to ask for a premium (valuation) so that he can exit at every level and for him to demand that premium, you need that euphoria, and that seems to be absent from the market currently even as the overall sentiment stays robust,” says AK Prabhakar, Head of Research at IDBI Capital Markets.Īccording to Prabhakar, public shareholders also expressed concern regarding the primary motivation behind these IPOs (in 2021), as it appeared that the main driving force was the exit motives of private market investors rather than a genuine desire for the businesses to grow, which was not well-received by public market investors, who value sustainable growth and long-term potential. However, following the IPOs of Zomato, Paytm, PB Fintech and others, companies have begun to understand that public shareholders have different perceptions of their businesses and valuations as compared to private investors, and the initial enthusiasm surrounding their IPO plans has faded. In addition, prominent unicorns such as OfBusiness, Pine Labs, Ola Cabs, Byju’s, PhonePe, and Unacademy have expressed intentions to go public by 2023 or 2024 while securing substantial funding in 2021. While Moneycontrol reported that Ola Electric has kicked off IPO discussions with investment banks, the talks are in fairly early stages, with no specific timeline yet. In the last six months, Honasa Consumer Ltd, the parent company of Mamaearth, is the sole VC-backed unicorn to have submitted draft papers to SEBI. For instance, API Holdings, parent of online pharmacy platform Pharmeasy, withdrew its IPO plans citing market conditions and ‘strategic considerations.’Īnother unicorn, SoftBank-backed Firstcry, has been looking to go public since last year, but has not filed its draft papers with the Securities and Exchange Board of India (SEBI) yet. But it stands out from other unicorns in the market as it is a 40-year-old traditional non-banking finance company (NBFC) and has been profitable, unlike most VC-backed startups, which are very new and have massive losses.ĭespite overall IPO activity remaining stable and India’s benchmark indices being near all-time highs, the majority of VC-backed ventures have experienced delays in their plans to go public, unlike the 2021 stock market boom, which attracted as many as four big IPOs. One notable example is Five Star Business Finance. Over the past year, the number of venture capital (VC)-backed unicorns going public in the country has been limited. India's thriving stock market has failed to witness any IPOs (initial public offerings) from VC-backed tech startups as companies and investors are hesitant to take loss-making ventures public due to past public shareholder responses. ![]()
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