Covid-19 pandemic spurs matured-stage start-ups to advance their IPO plans

Several mature startups, together with ecommerce and funds corporations, are actually taking the IPO route for elevating funds and giving exits to early traders. While most of them had been anticipated to faucet the general public market throughout time and some had brazenly said their intent, their plans seem to have been superior owing to the Covid-19 pandemic.

In the previous few days, many corporations, together with trend etailer Nykaa, meals supply platform Zomato, logistics and supply agency Delhivery, insurance coverage discovery platform Policybazaar, eyewear retail chain Lenskart and even the likes of Byju’s have brazenly spoken about their IPO plans. The others, who’re believed to be mulling a public itemizing, embody Walmart owned Flipkart and PhonePe, and on-line invoice fee platform MobiKwik.

Experts consider whereas the IPO plans have been accelerated partly due to ongoing pandemic, this was sure to occur quickly given the maturity of the ecosystem. “Covid-19 has helped establish the business models of ecommerce companies which has led them to see a better demand on their platforms, hence an IPO is the next strategy in place for them,” mentioned Pinakiranjan Mishra, client chief at EY India.

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Speaking at a current occasion, Falguni Nayar, founding father of Nykaa mentioned that her firm was seeing an acceleration in each gross sales and profitability because of which the net trend retailer’s IPO plans could also be superior. MobiKwik not too long ago kickstarted its IPO 2020 marketing campaign by elevating its Senior Vice-President Chandan Joshi to position of the corporate’s co-founder and CEO. In a current assembly with Business Standard, BYJU’s founder & CEO Byju Raveendran mentioned that the corporate was fairly clear with its intent to go for a public supply, although it’s but to resolve the timeframe for this.

“We strongly felt that the Indian ecosystem has reached that juncture where IPOs should be the direction the larger unicorns should take and over the next 5 years there should be a start upindex too,” says Ashish Fafadia, accomplice at early stage VC agency Blume Ventures.

Recent media report prompt that ecommerce main Flipkart is getting ready for an abroad itemizing as early as 2021 which may doubtlessly worth the agency at up to $50 billion. Flipkart’s IPO, in truth, has been pending for fairly a while. “Walmart’s only loss has come from Flipkart, which did gain traction during the pandemic, but has not been able to resurface on books. Flipkart’s marketplace and wholesale business saw their losses rising to more than 69 per cent in 2019, to Rs 5,459 crore. The only way Flipkart can stand against the likes of Amazon is with an IPO,” mentioned Somdutta Singh, founder and CEO of e-commerce administration agency Assiduus Global.

However, going public could forestall valuations from rising as quick as they did earlier than the itemizing. “However, the positive side is that companies will be focused on fine-tuning business models and ensure that they have profitability in sight,” explains Fafadia of Blume Venture.

Some of those corporations are additionally anticipating to elevate capital from public market given the truth that enterprise capital and personal fairness funding into the startup area has taken a success in the course of the pandemic, particularly sectors outdoors on-line schooling and commerce. Moreover, an finish to funding from the Chinese traders similar to Alibaba and Tencent is predicted to be one more reason.

“Larger companies such as unicorns are interested in expanding their funnel for sources of large amounts of capital they need for their journey. By accessing public markets, they are looking to open up another pool of capital. This is also crucial in light of the recent norms restricting investments from Chinese players,” mentioned Anup Jain, managing accomplice at Orios Venture Partners.

Some of the startup gamers, together with Flipkart and Policybazaar, have expressed curiosity in itemizing overseas. While on-line insurance coverage firm Policybazaar is eyeing a Nasdaq itemizing by September subsequent yr at a valuation of $3.5 billion, Flipkart is probably going to select between Singapore, or the US for the IPO.

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The present authorized framework doesn’t enable Indian corporations to instantly listing overseas, earlier than getting themselves listed in Indian stock exchanges. Hence, many corporations similar to MakeMyTrip have arrange mum or dad entities in different nations to be eligible for a international itemizing. Further, corporations like Reliance Industries and Infosys have used the American Depository Receipts (ADR)/Global Depository Receipts (GDR) route, for accessing international capital.

With the Lok Sabha, nevertheless, passing the Companies (Amendment) Bill, 2020 on Saturday, public corporations will now be allowed to listing sure class of securities in international jurisdictions.

“Companies which have a good international branding and market value can initiate listing on foreign stock exchanges under this norm. In the long-term, this will be a positive step as it will help Indian companies to be more self-reliant in terms of capital,” mentioned Salman Waris, managing accomplice at specialist expertise regulation agency TechLegis Advocates & Solicitors.

Tapping the IPO market

*Policybazaar goals to go public by Sept 2021 at a valuation over $3.5 bn

*Flipkart getting ready for an abroad itemizing by subsequent yr, at a $50 bn valuation

*Zomato planning to go public by first half of 2021

*Delhivery sees itself going public in 12-18 months

*Lenskart to launch IPO in subsequent 2-3 years

*Nykaa too is on the lookout for an IPO in a few years


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