Tech

India tech IPO boom to provide crucial test of investor appetite

Food delivery app Zomato hastened its stock market debut by Indian start-ups, hoping that crackdowns on Chinese technology groups will draw global investors’ attention to Indian technology offerings.

$ 1.25 billion Zomato Initial Public Offering Launched last week in Mumbai, the $ 2.2 billion list of Paytm, a payment and financial services app that has become a symbol of the excitement surrounding India’s digitization, is expected to follow in the coming months. Both Paytm and Zomato are backed by Chinese billionaire Jack Ma’s Ant Group, which counts Japanese SoftBank as an investor.

The IPO will arrive as investors become more and more bullish in India after Beijing targets China’s internet group. Diddy, a ride-haling business, raised $ 4.4 billion in a New York IPO and was hit by a regulator a few days after sending a large stake. Chinese tech stocks plummet..

Bankers said the listing in India marks the arrival of an era for US tech start-ups, which have cash-burning businesses that were previously funded only by individual investors. However, some analysts have raised concerns about the overheating of the Indian stock market and warned that regulators may be targeting this sector. Investor demand for Zomato’s IPO is 32 times higher than supply as of Friday.

Ausang Shukla, Managing Director of Corporate Finance at the brokerage firm Ambit, said:

“The founders of Zomato and Paytm’s fierce competitors want a successful IPO,” he added. “If they bottom out, the whole sector will be a bad name.”

Zomato and rival Swiggy, two major food delivery players, have embodied the rapid growth of Indian tech starters. Both expanded to hundreds of cities with significant discounts, and the blockade trapped Indians in their homes, resulting in a surge in orders during the Covid-19 pandemic. Nonetheless, Zomato reported a net loss of $ 100 million in the year to March.

After raising $ 3.6 billion this month, Zomato and Paytm could enter the open market with Flipkart, an e-commerce group that competes with Amazon in India, backed by US retailer Walmart. Valuation of $ 38 billion.. Insurance aggregator Policybazaar, beauty retailer Nykaa, and logistics company Delhivery all show that they will be listed soon.

Udhay Furtado, co-head of Citigroup’s Asian equity and capital markets, said: “Clearly there is a global appetite …. Investors from all over the world, including those who have never been active in the local Indian market.”

Zomato’s IPO is expected to give a $ 8 billion valuation, and Paytm has a market capitalization of $ 25 billion, making it one of the top 25 companies in India.

Neha Singh, founder of Bangalore data provider Tracxn, said the losses of both companies did not discourage investors. “In India, you were expected to make a profit before listing. That has changed,” Shin said. “The market is the best ever and people want to take advantage of it.”

This list is consistent with Indian companies rushing to open up public markets, despite the economic struggle after the brutal second wave of coronavirus. According to Refinitiv data, 37 companies listed in India in the first half of 2021 raised $ 3.9 billion, the highest since the global financial crisis. The benchmark Nifty50 index rose 13% this year to a record high.

For Zomato, investors want the company to be India’s answer to Meituan, China’s largest food delivery platform, which went into the black in 2019. Paytm has established itself as a potential super app to become Alipay in India, an online supermarket for Ant Group’s financial services.

Like its peers, Zomato has gained market share in India’s vast informal economy as the blockade has expanded its online business. But analysts are wondering if the boom will continue.

Jeffreys said whether food delivery in India could be sustainable in the long run, given that orders remain much lower than in China and the United States, “of significant investors. “Concerns.” “There are many questions in the minds of investors … The FOMO factor should keep the level of excitement high,” the investment bank wrote.

Regulatory uncertainty is a risk for India, as the government has introduced legislation designed to give more control over the data of 1.4 billion people, as in China.

“Indian regulators have taken a somewhat whimsical view of the role of technology in the financial industry, especially when dealing with foreign players,” said Zennon Kapron, director of Kapronasia, a regional fintech consulting firm. Stated.

If Zomato and other start-ups are trying to enter the market, they will want investors to give them suspicious profits.

Samir Arora, founder of the investment group Helios Capital, said: “Zomato is unique and Indians like what is unique on the market,” he added. “It’s in the red, but it’s not obscene.”

India tech IPO boom to provide crucial test of investor appetite Source link India tech IPO boom to provide crucial test of investor appetite

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