Zomato Delivers IPO Feeding Frenzy, 3 More Unicorns Line Up


The market for initial public offerings (IPOs) in India is turning into a feeding frenzy.

The amount of money raised in IPOs this year has reached $8.8 billion, already surpassing the totals of the past three years though it’s only August. At the current pace, 2021 would exceed the all-time record of $11.8 billion. Founders, bankers, lawyers, and advisers are racing to cash in on fervent demand for fresh public offerings.

The catalyst, in a word, is Zomato Limited, the food-delivery startup that went public in July and, despite deep losses and mediocre prospects for profitability, shares have soared more than 70 percent. That has fuelled the idea that similarly, profit-challenged startups could find a strong reception from investors.

Oyo Hotels & Homes Private Limited, a long-troubled lodging giant, started work last week on its draft prospectus and aims to file in October, according to people familiar with the matter. The ride-hailing leader Ola and fintech startup Pine Labs Private Limited have also begun talks with investment bankers, according to other people aware of the situation.

“India is definitely the star of the show – that is the new phenomenon,” said Udhay Furtado, co-head of Asia equity capital markets at Citigroup Inc., the lead foreign bank in Asia IPO league tables so far this year. “Zomato really opened people’s eyes to India and now we have all these privately funded unicorns coming to the public market.”

The performance of recent IPOs, such as Zomato, has fed the enthusiasm. Newly listed Indian stocks are beating the benchmark Nifty 50 Index by more than 40 percentage points this year, the biggest gap in seven years. 

The country’s three most valuable startups are all considering or planning IPOs. Paytm, the country’s leader in digital payments, filed its preliminary offering documents, aiming to raise as much as 166 billion rupees ($2.2 billion). If it reaches that level, the IPO would be the country’s largest debut ever, eclipsing the more than 150 billion rupees raised by state-owned Coal India Limited.

Flipkart, the Indian e-commerce giant controlled by Walmart Inc., is aiming for an IPO as soon as the fourth quarter, Bloomberg News has reported. Byju’s, a digital education startup valued at $16.5 billion, is in early discussions about an IPO and bankers are encouraging the company to take advantage of the red-hot market, according to people familiar with the matter.

Byju’s is in the midst of absorbing several substantial acquisitions and is likely to hold off on any listing for at least a year.

Such is the hysteria that PhonePe, a payments startup Walmart acquired as part of its Flipkart deal, is considering shifting its incorporation back to India from Singapore to capture local investor attention, according to two people familiar with the matter who did not want to be identified. The regulatory upheaval in China has also sent investors looking for promising opportunities in countries with more predictable government policies.

“If global investors have to pick an emerging market, the balance is tilting in India’s favor after the regulatory action in the China internet ecosystem,” said Pankaj Naik, executive director, and co-head, digital & technology at the consultancy, Avendus Capital Pvt. “India may not be as attractive as China in the broader economic sense but it’s looking like a safer bet.”

Oyo Hotels, PhonePe, and Pine Labs did not respond to emails seeking comment.

India’s success with startups has long lagged beyond that of the U.S. or China. But this year has been something of a breakout. With the Covid-19 pandemic, many consumers have turned to online services for grocery deliveries and other e-commerce, along with math tutoring and medical diagnoses. Revenue has surged.


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