IPOs on hold as startups look to weather the storm

Bengaluru: Several startup IPOs, including that of Boat, a direct-to-consumer (D2C) brand, Oyo Hotels & Homes, Snapdeal and PharmEasy are delayed and may not hit the public markets this calendar year, amid an uncertain economic backdrop triggered by geopolitical developments and rising interest rates in the United States.

Importantly, the country’s market regulator, Securities and Exchange Board of India (Sebi), has not approved most of these companies, although they have filed their filings. IPO more than four to five months ago.

New-age headphone and wearable brand Boat, which filed for Rs 2,000 crore on January 27 with Sebi, is now expected to slow down its IPO plan, people briefed have told this topic. It remains to obtain Sebi’s authorization for the offer.

SoftBank-backed Oyo and Snapdeal, which also filed their DRHPs (draft red herring prospectus) with Sebi last year, have yet to receive Sebi’s final clearance and IPO deadlines. will likely be delayed, as ET reported earlier.

PharmEasy is also taking a wait-and-see approach before going to market due to valuation concerns even as the Mumbai-based company got the green light from the regulator for its Rs 6,250 crore IPO.

Typically, it takes two to three months for final Sebi clearance after the HDRD is filed.

“The boat is going slow (on IPO). He is looking at potentially the January-March quarter or at the earliest in December given the uncertain market conditions… In addition, the next few months will be commercially crucial months… including the holiday season sale. They want to focus on that,” one person briefed on the matter said.

While Boat, which posted a profit of Rs 118 crore for the six-month period ending September 2021, is in no rush to enter the markets, other startups like Oyo and Snapdeal may delay their expansion plans. at least a quarter or two.

When contacted, a Boat spokesperson did not immediately respond to ET’s request for comment, while emails sent to Snapdeal, Oyo did not elicit a response before time. press Sunday.

“They (other startups) still have to get a Sebi nod, after which the road shows start and other formalities will take a bit longer. Things also depend on LIC’s next IPO for gauge market appetite for other issues,” one of the sources added.

LIC’s public offering of over Rs 20,000 crore will open for subscriptions on May 4 and will close on May 9.

Sources from some of the companies mentioned above are also of the view that LIC’s IPO is a high stakes game for the government and hence its listing has taken center stage.

“If LIC’s IPO were to be postponed, who are we (startups)? It’s fine to wait and even change valuation expectations with current market realities in mind,” a senior executive at one of the companies that filed for IPO told ET. in stock exchange.

ET previously reported that
Oyo’s bid size will likely be lower than its original plan of $1.2 billion, while Snapdeal has filed a public offering of around $165 million. Bloomberg Newswire

had reported that Oyo might even pause its IPO altogether, but the company denied any such plans at the time.

ET had reported on February 18 that some of the major IPOs like
PharmEasy could see a valuation adjustment on its public debut. It was last valued at $5.6 billion after closing nearly $350 million in funding in October last year.

All told, startup founders and investors continue to believe that good companies will eventually be able to list on national stock exchanges, even if they have to settle for a lower valuation.

Sebi review

Sources said Sebi asked the startups about their offer to sell (OFS) and also what they plan to do with the primary selling capital. OFS is when existing shareholders sell to other investors.

People involved in startup IPO proceedings told ET that the failure of large IPOs such as Paytm has made the regulator cautious.

Sources with direct knowledge of the matter said that at least two of the aforementioned companies have faced an increased number of requests from the regulator regarding the use of funds and the pricing of their respective IPOs.

“Boat had mentioned that it planned to use new capital to repay or prepay its debt in DRHP, but Sebi still had follow-up questions about their plans…given how some of the previous IPOs of startup have taken place since listing last year,” the person added.

Paytm’s Rs 18,300 crore IPO had an OFS component of Rs 10,000 crore where its existing investors sold part of their stake in the company. CarTrade facilitated a Rs 3,000 crore IPO last August in which was entirely a sell offer.

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