The two-day meeting, held in Bengaluru and hosted by Japan’s SoftBank and JP Morgan, was aimed at helping the domestic public investment community understand some of the tech businesses and their path ahead. The meeting is significant as it comes at a time when the global tech industry is going through a major correction in both private and public market valuations.
“DIIs are a vital constituent of the Indian stock market, and they will only get more important with time… As more tech companies go public and become a more significant part of the indices, it is essential for these two constituents to build a relationship and understand each other better,” said Sumer Juneja, managing partner and India head, SoftBank Investment Advisers.
Last year, eight Indian startups listed on the public markets, including the likes of , , PolicyBazaar and — with seven of these being on domestic exchanges.
However, DIIs have had a mixed outlook towards these tech listings. For instance, during
Zomato’s listing in July 2021, almost 19 domestic mutual funds participated in its anchor book through 74 schemes. These included big names such as Kotak MF, ICICI Prudential,
MF and Aditya Birla Sun Life Insurance, among others.
During the listing for Paytm parent company One97 Communications in November, only four local asset management companies participated in the anchor book.
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According to people who attended the closed-door meeting, DIIs remain cautious about backing startups.
“There is a sense of caution that DIIs might have towards high-growth companies, since they are looking for predictability in business models and outcomes… However, they do understand the secular trend of investing in technology stocks which potentially can create value over the next 10-15 years,” said one of the people who attended the meeting.
A clear example of this was in Nykaa’s anchor book participation, where of the total allocation to anchor investors, 70,98,801 equity shares or 33.33% of the total were allocated to 21 domestic mutual funds through 93 schemes.
As opposed to the venture capital community, which encourages pivots and high growth for a startup, DIIs are focused on stability in execution from even some of the companies that listed last year, said another person who met with the asset managers.
The meeting comes at a time when the stocks of Indian tech companies that listed last year, such as Zomato and Paytm, have seen a steep drop. The stocks of listed digital startups have declined globally, too, tracking inflationary pressures and rising interest rates.