A seemingly minor change in the way India’s competition regulator determines the market dominance of digital companies could spark antitrust probes against many such firms, sources aware of the matter told us. While most startups delay their IPOs, logistics player Delhivery is likely to go ahead with its plan soon. This and more as we start the month of May.
Also in this letter:
■ Delhivery to go ahead with IPO while others like Boat delay
■ Musk will be a great steward of Twitter: Sridhar Vembu
■ Uday Shankar, Bodhi Tree to invest $600 million in Allen Career Institute
CCI tweak could expose several firms open to antitrust probes
A change in the interpretation of ‘relevant market’ by the Competition Commission of India (CCI) has opened up several digital platforms to antitrust probes.
What’s the change? Earlier, the commission used to club online and offline markets while determining the market dominance of a digital player, the sources said.
- For instance, while considering an ecommerce platform that sells consumer goods, the CCI used to consider the online and offline markets together to arrive at the market share of the ecommerce player.
- Since the offline market is a large segment, most ecommerce firms ended up below market dominance threshold as they did not own any bricks-and-mortar stores.
- But now the CCI has started considering only the online segment as a ‘relevant market’ for digital platforms.
The reason: “The interplay between online and offline markets has changed significantly in recent times, prompting this change from the CCI,” said one of the people, who did not wish to be identified.
The fallout: Legal experts said this distinction being drawn between the online and offline markets will have a significant impact on ecommerce as viewed through the lens of competition law.
Under the scanner: The CCI is currently investigating at least a dozen leading digital platforms, including Amazon, Flipkart, Zomato and Swiggy for allegedly violating competition rules.
Delhivery may launch IPO at reduced size of Rs 5,500 crore
New-age logistics firm Delhivery is likely to launch its offering this month, investment bankers told us. The company may cut the issue size from Rs 7,460 crore to Rs 5,500 crore owing to challenging market conditions, said a person aware of the matter.
Elephant in the room: Meanwhile, LIC’s public offering of more than Rs 20,000 crore will open for subscriptions on May 4 and close on May 9.
“If the LIC IPO had to be postponed, who are we (startups)? It’s fine to wait it out and even change valuation expectations keeping the current market realities in mind,” said a senior executive at a company that has filed for an IPO.
While Boat plans to delay its IPO
Multiple startup IPOs, including those of direct-to-consumer audio brand Boat, Oyo Hotels & Homes, Snapdeal and PharmEasy may not hit the public markets in 2022, amid geopolitical uncertainties and rising interest rates in the US.
Cautious Sebi: Significantly, the Securities and Exchange Board of India (Sebi) is yet to approve most of these companies’ IPOs, which they filed for several months ago.
Get in line: The latest of these is Boat, which had filed for a Rs 2,000 crore IPO on January 27, is now likely to go slow on its offering, people briefed on the matter said. It is yet to secure Sebi’s clearance on the offer.
We previously reported that SoftBank-backed Oyo and Snapdeal, which had also filed their draft IPO papers with Sebi last year, are yet to receive final clearance, meaning their IPOs are likely to be delayed.
PharmEasy is also taking a wait-and-watch approach before going to the market owing to valuation concerns. The Mumbai-based company has however received Sebi’s approval for its Rs 6,250-crore IPO
Musk will be a great steward of Twitter, says Sridhar Vembu
Elon Musk’s acquisition of Twitter will widen views on the global platform that has “painted itself into a corner” by limiting diversity of opinion, founder & CEO of Zoho Corp Sridhar Vembu told us in an exclusive interview.
The social media platform, he said, was limiting itself with its “virtue-signalling” and ideological affiliations.
Elon effect: Musk’s takeover will make the platform more open to diverse viewpoints, said the 54-year-old technocrat.
Describing Musk as “a great visionary,” Vembu said that he agreed with the American billionaire’s views on stewardship of free speech. “I think he (Musk) would be a better steward of Twitter than what the existing management has been,” Vembu said, adding that the ‘cancel culture’ prevalent on the platform is something both Musk and he are opposed to.
Wipro on acquisitions: Meanwhile, IT services provider Wipro will continue to acquire companies in areas that are underpenetrated and look at only large targets that can be scaled up, chief financial officer Jatin Dalal told us. “We will never do very small acquisitions because in the services sector it doesn’t make sense,” he added.
Uday Shankar and Bodhi Tree to invest $600M in Allen Career Institute
Uday Shankar (left) and James Murdoch
Uday Shankar and James Murdoch-backed Bodhi Tree Systems have reached an agreement to acquire a significant minority stake in Kota-headquartered Allen Career Institute. Bodhi Tree will be investing $600 million (around Rs 4,500 crore) in Allen.
The Maheshwari family-owned Allen Career Institute is arguably India’s largest coaching institute, preparing students for entrance exams in multiple streams.
This would be Bodhi Tree’s second big bet since it was formed as a 51:49 JV between Shankar, the former president of The Walt Disney Company Asia Pacific and former chairman of Star and Disney India, and Murdoch’s Lupa Systems.
Last week, Bodhi Tree entered into an agreement with Reliance Industries to invest Rs 13,500 crore in Viacom18, a 51:49 joint venture between Reliance Industries-owned TV18 and Paramount Global (formerly known as ViacomCBS).
UpGrad acquisition: Edtech platform upGrad has acquired the International School of Engineering (Insofe), one of the top data science institutes in India, in a $33 million share swap deal. This is its seventh acquisition in the last couple of years.
VC firm Rise Capital sets up shop in India
Venture capital firm Rise Capital, founded by former Tiger Global executive Nazar Yasin, has set up shop in India and has hired Anuj Mehta as its India head to source opportunities from the region.
The VC firm is looking to take seed to Series B bets on Indian companies with a cheque size ranging from $100,000-$10 million from its third fund, Yasin, who quit Tiger Global in 2013, told us.
India bets: The fund, which has backed global companies such as Facily, Kitopi, Kueski and Gaia, already closed two deals in India recently. It invested in TradeX, an investment app, and SaveIn, a neobank, as part of their larger seed stage rounds raised in the past month.
The firm, which raised a $100 million maiden fund in 2014, is now deploying out of its third fund that it mopped up in 2019.
Though the amount remains undisclosed, sources said its size is $150-$180 million.
ISMC to invest $3 billion in semiconductor plant in Karnataka
International semiconductor consortium ISMC said on Sunday that it would invest $3 billion in a semiconductor chip-making plant in Karnataka.
Racing ahead: This has given the southern state the lead in cornering investments under the Union government’s $10-billion incentive scheme for semiconductor companies.
ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor.
The JV said it would invest in a 65-nanometre analogue semiconductor fabrication plant in Mysuru. US-based chipmaker Intel is buying out Tower in a $5.4 billion deal.
ISMC has sought 150 acres at Kochanahalli industrial area in Mysuru. The project is expected to generate about 1,500 direct jobs. The government said it would also create about 10,000 indirect job opportunities and kick off an ancillary semiconductor ecosystem.
We were the first to report on April 25 that Karnataka was close to pipping Gujarat in inking a deal with the consortium for a semiconductor plant.
Other Top Stories By Our Reporters
Snap bulks up India team as current head Durgesh Kaushik leaves: Snap Inc, the parent company of Snapchat, has made key hires for its growth, advertising partnerships and augmented reality (AR) teams in India as part of its increasing focus on the country.
Startups, tech firms fuel demand for coworking spaces: Co-working and managed office space providers are seeing a big spike in demand as more companies call back people to work or opt for hybrid work. Tech startups, IT and ITeS companies, and BPOs are leading the pack when it comes to opting for such spaces.
As NFT prices drop, taxman could come knocking: A recent drop in the prices of high-value non-fungible tokens (NFTs), coupled with ambiguity in the recently established tax framework, will lead to tax scrutiny for Indian investors in the coming months, according to tax experts.
Global Picks We Are Reading
■ Technocrats triumphed at Apple (NYT)
■ Ukraine war puts spy satellites for hire in the spotlight (WSJ)
■ How a billionaires boys’ club came to dominate the public square (The Washington Post)
Today’s ETtech Morning Dispatch was curated by Zaheer Merchant in Mumbai and Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi.
