Disappointing stock market start, where its market capitalization fell below its previous private valuation, may be affected Upcoming Tech IPO in India and the overall financing round on startups, investors and analysts told ET.
Paytm’s initial public offering could, in fact, soften private markets and technical valuations overall
A record year for dealmaking In the digital economy, he said.
At least 37 unicorns—companies with a private market valuation of $1 billion or more—were added this year. many companies
Raised back-to-back funding rounds This year the valuation has doubled or tripled within a few months, as reported by ET earlier.
“For a startup listing, investors would like to see some clear dominance in target markets with reasonable net margins or unit economics,” said Anurag Singh, managing partner at hedge fund Ansid Capital. “Basically, the startup market has to stop ‘making unicorns’ by bidding itself. Value creation happiness on the ground with the business model… But for some startups, valuations for listings are completely different from reality.
Paytm’s listing followed a string of stellar IPOs like Unicorn
zomato,
hero And
Policybazaar India, whose market cap increased after entering the market.
(Graphic: Rahul Awasthi/ETTech)
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In Paytm’s case, the size of the IPO—approximately $2.5 billion—
was the largest ever in India and the fourth largest for fintech globally. Given the lack of a clear path to profitability, Paytm’s $20 billion valuation became difficult to justify in the public markets, analysts said.
“This pricing in terms of profitability is not something the markets are hungry for. It hasn’t worked well in the US either, where new-age listings are struggling to maintain their listing valuations,” said Singh. said.
Logistics and supply chain provider including several other startups
Delhivery and online pharmacy platforms
Pharmeasy, have already filed their IPO prospectus and are expected to launch next year.
Noida-based Paytm was valued at $16 billion
When it raised $1 billion in 2019 And it sought a valuation of $20 billion at the time of its IPO.
“If India’s largest fintech company goes public and hits the lower circuit on day one, it is a negative sign… a startup that is planning an IPO,” said one investor.
This investor said, “The people who are writing these checks have given these companies hope of capital, but if they don’t perform and execute, they will end up paving the way for Paytm…”. “People are going to be careful, other private companies that are becoming unicorns basically have to become sustainable when they go to market, or at least become durable. Unlimited cash will not be stolen.”
Other investors said the private and public markets may not generalize to a one-time phenomenon, but that bankers may need to learn something: fair value of IPOs, leaving value for public market investors, and a strong and easy-going Understandable business model.
“The IPO is a great milestone. A company should not forget that fundamentals such as revenue, profitability, business model and fair value are core to any business. Public markets should give some time and oversight to new-age tech companies in the next two years,” said Ashish Dave, CEO, Mirae Asset Venture Investments (India), which has backed startups like Zomato, Ola and BigBasket.
“The next group of startups looking to tap the public market may be cautious and wait for the market to bounce back,” said Aditya Kondavar, chief operating officer of financial services platform, JST Investments.
“You want a really conducive environment so that the company going IPO can maximize its subscriptions. Now that that’s done, we may have a little break in the IPO.” “What happened today is a big event. Companies going IPO will be cautious they wanted things to go well and then they will decide.