Startups in India, spearheaded by Zomato, are fueling the $8.8 billion worth of IPOs in the country
In addition to Zomato, other privately funded Indian firms including Paytm, Byju's, Flipkart, and Oyo have also been able to list.
India's IPO business is expanding. So far this year's IPO revenues have exceeded those of the prior three years. A record of $11.8 billion will be broken in 2021. Increasing demand for new initial public offerings has entrepreneurs, bankers, attorneys, and consultants scrambling and rushing to create fresh public offerings.
In short, Zomato Ltd. is the spark. Despite enormous losses and uncertain profitability, the stock has risen more than 70% since July. This year, for the first time in seven years, freshly listed Indian companies outperformed the Nifty 50 Index by almost 40%. Three of America's most valuable companies are considering IPOs. Paytm, India's largest digital payments company, has filed preliminary papers to raise up to 1 billion rupees through an IPO. The idea that investors could like profit-challenged firms has gaining popularity.
In a prospectus to be submitted in October, Oyo Hotels & Homes Private Limited began preparing last week. Sources said Ola and Pine Labs Private Limited have begun talks with investment bankers.
In a new phenomenon, Udhay Furtado, co-head of Citigroup Inc.'s Asia equity capital markets, says India is definitely the star. Three of the country's most valuable firms are exploring an IPO. Paytm has filed preliminary papers for an IPO worth up to Rs 16,600 crore. If it does, it will be the country's largest IPO, exceeding Coal India Ltd's Rs 15,000 crore.
Bankers are encouraging Byju's, a $16.5 billion education technology business, to capitalise on the expanding industry. The company is presently integrating large acquisitions and will not list for a year.
Walmart may move PhonePe, a payments firm acquired with Flipkart, from Singapore to India to attract Indian investors. In reaction to China's regulatory uncertainty, investors are looking for possibilities elsewhere.
The balance is shifting towards India, according to Pankaj Naik, executive director and co-head of digital and technology at Avendus Capital Pvt. Ltd. In terms of economics, India looks to be a safer option than China.
India's startup success rate has always lagged behind the US and China. But this year was a turning point. Food delivery, e-commerce, academic counselling, and medical diagnosis are all popular online services has seen no revenue soared.
China's anti-private business campaign has worried foreign investors including Fidelity Investments and KKR & Co. In July, India surpassed China in VC investments for the first time since 2013.
This sort of funding has helped India create several unicorns, or $1 billion+ firms. According to CB Insights, hundreds more like Byju's, Paytm, and Oyo will go public in the coming years. Startups increasingly outnumber conglomerates and state-owned companies like Coal India in terms of IPO size.
Many Indian technology unicorns have huge growth potential. India is a great place to invest because of its macroeconomic and political stability, as well as its general investment regulations.
Goldman Sachs, Morgan Stanley, JPMorgan Chase and Citigroup Inc. have reportedly been discussed. Sources say Kotak Mahindra Bank's investment banking division is participating in many IPO negotiations.
Oyo, a SoftBank-backed business with a shady background, may go public. The hotel booking company founded by Ritesh Agarwal, 27, failed to expand globally and was hit by the Covid-19 pandemic. When it shut down last year, it cut staff, furloughed several, and cut pay and marketing.
But the radical redesign helped Oyo endure amid a slump in reservations in Europe, America, and Asia. Agarwal claims the coronavirus pandemic hit Oyo like a "cyclone," causing a 66% revenue loss in 30 days.
Work on Oyo's drafting prospectus began this week, a source says. Kotak and JPMorgan have already been picked, and Citi is close behind. Currently, the actual date, number, and composition of main and secondary shares are unknown.
API Holdings, owner of the country's largest online pharmacy PharmEasy, is exploring a $1 billion IPO.
Bankers are reportedly courting Pine Labs, an Indian and Southeast Asian fintech startup, for $10 billion. The latest estimate is $3 billion.
Vani Kola, founder and MD of Kalaari Capital, says Indian public market investors favour innovation and development. “Hundreds more IPOs will arise during the next decade.” So far this year's IPO revenues have exceeded those of the prior three years.
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