The blockbuster IPO (Initial Public Offerings) debuts in 2020, like that of Mrs. Bector, Burger King, and Happiest Minds in the Indian stock markets, has only led the country’s emerging tech startups to build up enough confidence to knock the doors on the public markets.
“The Indian IPO market has realized the potential of startups which are disrupting traditional businesses or ways of doing business and garnering large market share in different segments. Recent IPOs by Route Mobile, Happiest Minds, CAMs or Burger King have all been oversubscribed many times and debuted with high multiples,” said Anup Jain, Managing Partner, Orios Venture Partners, according to Business Insider.
Multiple Indian startups like Delhivery, Zomato, Policybazaar, Flipkart, and Nykaa are reportedly eyeing the public markets in 2021 with the Indian government too seems to be welcoming of tech IPOs. India’s market regulator, SEBI (Securities and Exchange Board of India) has set up an Innovators Growth Platform (IGP) and announced a consultation paper seeking comments for new rules that will encourage startups to move towards IPO.
Here’s a look at the startups reportedly heading for an IPO in 2021
“There are certain tailwinds which are pushing startups towards IPO for fundraising and to provide investors with a healthy exit. The new norms announced by SEBI such as easier migration to the mainboard, decreased holding period, and special rights have made IPO more lucrative,” said Ankur Bansal co-founder and director, BlackSoil.
Startups preparing for an IPO
Evaluation as of the end of 2020: $1.5 billion
Delhivery, which is an Indian logistics unicorn, recently raised investment from Steadview Capital, a global investment firm. It picked up $25 million worth of shares in Delhivery through a secondary transaction.
With the investment, the co-founder of the logistics unicorn hinted that the startup would head towards an IPO soon. “Steadview is a long-term investor and we see them playing a key role as Delhivery heads towards the public markets in the next 12-15 months,” said Sahil Barua, founder, and CEO of Delhivery.
In a recent interview, Barua informed about the company’s orders saying that the company processes over 1.5 million orders per day.
Evaluation as of the end of 2020: $3.9 billion
Indian food tech unicorn Zomato would become one of the most-talked-about IPOs. The company has also closed pre-IPO funding of $660 million. With the latest round, 10 new investors including Baillie Gifford, Tiger Global, Luxor, Kora, Fidelity (FMR), Mirae, D1 Capital, and Steadview joined Zomato’s board.
According to reports from the Economic Times, Deepinder Goyal, Zomato CEO, in an email to his employees said that the company is looking to list publicly in the first half of 2021.
Even while Zomato faced the test of times in the pandemic-inflicted year of 2020, it also brought the food tech startup closer to profitability. VCs believe this ability to bounce back from a crisis where companies even saw no revenue, would bring in more strength for the startups to face the unforgiving public market. “Startups also emerged as winners post-lockdown with increased adoption by consumers while low investor confidence has forced startups to fine-tune business models towards profitability, making them more appealing to retail Indian investors,” Bansal told Business Insider.
Evaluation as of the end of 2020: $1.5 billion
India’s insurance unicorn Policybazaar, backed by investors like SoftBank’s Vision Fund, Tiger Global Management, and Tencent Holdings, is reportedly looking to head for an IPO in 2021.
Yashish Dahiya, the co-founder of Policybazaar, told Bloomberg in an interview earlier this year about his plans for an IPO, while also talking about funding plans, he said, “we have global interest and will raise in the coming week.”
While there has been no development on the report, it is expected that by September 2021, PolicyBazaar will head for an IPO.
Evaluation as of the end of 2020: $24.9 billion
Walmart-owned Flipkart could also hit the public market this year. Walmart CEO Doug McMillon has often hinted about the Indian e-commerce giant, Flipkart’s IPO debut, which would reportedly be worth $10 billion.
One of the most-talked-about companies, Flipkart was last valued at $24.9 billion and could head for an overseas IPO. This fits in well with what VCs in India, like Jain, expect of India’s tech IPOs. “India public markets have acquired the level of maturity and depth of coverage to support IPOs of this size (less than $5 billion) very easily. Beyond this, the IPOs would probably be better off in overseas markets,” he said.
Evaluation as of the end of 2020: <$1 billion
The Falguni Nayyar-headed startup, Nykaa too is headed for the public markets in the next year. Indian beauty e-commerce unicorn turned unicorn this year and has raised investments from Boston-based asset management company Fidelity Management & Research Company, Steadview Capital, and also from actresses including Katrina Kaif and Alia Bhatt.
Nykaa’s profitability streak:
|FY20||₹1,860 crore||₹94 crore|
|FY19||₹1,159.32 crore||₹2.3 crore|
With the rise in e-commerce sales despite the restrictions due to the Covid-19 lockdowns, Nykaa expects its revenue to grow by 40% in FY21.