IPO suspended as startups try to wait for the storm

Bangalore: Multiple startup IPOs including that of Boata direct to consumer brand (D2C), Oyo Hotels and houses, quick deal Other PharmaEasy they are lagging behind and may not hit public markets this calendar year, due to the uncertain economic conditions triggered by geopolitical developments and rising interest rates in the United States.

What is significant is that the country’s market regulator Securities and Exchange Board of India (Sebi) did not give a nod to most of these companies despite filing IPO documents more than four to five months ago.

Earphone and wearables brand New-age Boat, which filed for Rs 2,000 crore on Jan.27 with Sebi, is now set to slow its IPO plan, people informed on the matter said. He has yet to secure Sebi’s authorization on the offer.

Oyo and Snapdeal, backed by SoftBank, who also filed their DRHP (draft red herring prospectus) in Sebi last year, have yet to receive final clearance from Sebi and their IPO timelines are likely to experience delays, such as previously reported by ET.

PharmEasy is also taking a wait-and-see approach before entering the market due to valuation issues, although the Mumbai-based company has secured regulatory approval for its Rs 6,250 crore IPO.

Typically, it takes two to three months for the final authorization from Sebi after filing the DRHP.

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“The boat is going slow (on IPO). You are looking at the January-March quarter potentially or December at the earliest given the uncertain market conditions … Also, the next few months will be crucial months from an economic point of view … including the holiday balances. They want to focus on this, “said one person with knowledge of the matter.

While Boat, which posted a profit of Rs 118 crore for the six-month period ending September 2021, is in no rush to hit the markets, other startups like Oyo and Snapdeal could delay their plans by 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 until press time on Sunday.

“They (other startups) have yet to secure a Sebi nod, after the road shows start and other formalities will still take some time. Also, things are up to the upcoming LIC IPO to gauge the market’s appetite for others. issues “, one of the added sources.

The public offering of LICs of over Rs 20,000 crore will open for subscriptions on May 4th and close on May 9th.

Sources in some of the aforementioned companies are also of the opinion that the LIC IPO is a high-risk game for the government and therefore its listing took center stage.

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

ET had previously reported this
Oyo’s offering size is likely to be smaller than its initial $ 1.2 billion plan while Snapdeal has applied for a public offering of approximately $ 165 million. Bloomberg Newswire

had reported that Oyo might even have shelved its IPO entirely, but at the time the company denied any such plans.

ET had reported on February 18 saying that some of the major IPOs like
PharmEasy may see adjustments in their ratings at the public debut. It was last valued at $ 5.6 billion after closing a nearly $ 350 million loan in October last year.

That said, startup founders and investors continue to believe that good companies will eventually be able to go public on national stock exchanges even though they may have to settle for a lower valuation.

Sebi ballot

Sources said Sebi has been investigating the startups on their offering for sale (OFS) component and also what they intend to do with the selling capital of the primary shares. SFO is when existing shareholders sell to other investors.

People involved in startup IPO procedures told ET that the failure of large IPOs like Paytm’s made the regulator cautious.

Sources directly informed on the matter said that at least two of the aforementioned companies had to face a greater number of questions from the regulator about the use of the funds, about the prices of their respective IPOs.

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

Paytm’s Rs 18,300 crore IPO had an Rs 10,000 crore OFS component in which its existing investors sold parts of their stake in the company. CarTrade facilitated an IPO of Rs 3,000 crore last August in which it was completely an offer for sale.

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