In an exclusive chat, which was a part of the Economic Times Startup Awards 2021, in Bengaluru on March 12, Sahil Barua, cofounder and chief executive of logistics unicorn, Delhivery said that the company has decided to wait out on its IPO plans, considering the market volatility, which spooked public market investors during the first quarter of 2022. This was the first time that Delhivery officially said that it has decided to push its listing plan.
“We want to go public when our company is well understood. While valuation is one of the factors (for the delay), it is not a critical factor – since we do not require the capital, and market conditions currently are bumpy,” said Barua. He further added that the right time for the company to look at public markets will be when the focus is on the company’s performance and not on geopolitical and other macro factors, plaguing the public markets.
“Our view was that there was no point in taking our investors through a bumpy ride in this quarter (considering market conditions) and having to answer questions which aren’t related to the business. So we decided to wait it out,” added Barua.
Backed by SoftBank and Carlyle,
Delhivery, in its draft red herring prospectus (DRHP) filed in November, had said it planned to raise Rs 5,000 crore through fresh issuance of shares while the IPO will have an offer for sale (OFS) component of Rs 2,460 crore where some of its existing investors will sell part of their holdings.
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Earlier in January, this year,
the company also received markets regulator, Securities and Exchange Board of India’s (Sebi) nod for its IPO.
However, Delhivery isn’t the only startup that has decided to wait for its listing. A slew of other leading startups including PharmEasy has hit pause on their IPO plans. Oyo Hotels and Homes, which is yet to get Sebi’s nod for the IPO, has postponed its plans and is
likely to reduce its issue size as well.
Mumbai-based API Holdings, which runs PharmEasy, is also uncertain about its IPO plans even
after receiving the clearance from Sebi last month. The company, which acquired diagnostic chain Thyrocare last year, was initially planning to launch its Rs 6,250 crore issue this financial year.
“It is unclear as to when exactly the markets will stabilise and thus there is uncertainty on the timing of the launch. Life Insurance Corporation (LIC) IPO getting delayed is a major signal of the current mood in the markets,” a person aware of its plans said. A spokesperson of PharmEasy didn’t immediately comment on its IPO plans.
“Obviously, there is a correction in valuations and everyone is cognizant of it..they (PharmEasy) are also not insisting on previous expectations,” this person quoted above said.
ET also reported on March 3, citing sources, that the much-awaited IPO of Life Insurance LIC could be pushed to next fiscal because of market volatility due to the Russia-Ukraine conflict.
While the above-mentioned companies have had to rethink their IPO plans, recently, payments firm Mobikwik also deferred its issue plans after Paytm’s disastrous Rs 18,300 crore public debut on the Indian bourses in November last year–triggering an immediate meltdown in fintech valuations,
ET had reported on November 23. Its cofounder Upasana Taku told ET on March 9 that the Sebi approval on its IPO is valid for a year and will take a call based on market conditions.
Mobikwik received Sebi’s nod for its Rs 1,900 crore IPO in October last year.
Even as the dust settles and markets reach a certain semblance, going public will continue to be an uphill task for Indian startups.
“I think it will be quite challenging for companies like Urban Company or Delhivery to list in the next 3-6 months unless the trends change globally. It is very tough … and, now that there is LIC’s IPO; it is going to suck out some liquidity from the ecosystem (markets) as well,” said Nithin Kamath, founder, and chief executive, of online stockbroking firm, Zerodha who was also speaking at The Economic Times Startup Awards 2021.
As for companies such as Urban Company which were
planning on an IPO in the next 18-24 months, the focus has changed.
“I think this year we would rather just focus on business and continue to grow and when markets become neutral we will reconsider (our IPO),” said Abhiraj Singh Bhal, cofounder and chief executive of Urban Company.
Watch the full panel discussion here:
