VEP News

Vacancy, Employees, & Pension News

A tale of two IPOs

Hi, Digbijay here. Today, Ashwin and I report on two well-known payments startups and their plans to cash in during the upcoming IPO rush.

Also in this letter:

  • Flipkart’s valuation soars to $37.6 billion
  • SoftBank’s investment in Swiggy gets CCI nod
  • Antrix urges US federal court to stop Devas

Mobikwik files for IPO, shareholders approve Paytm’s

STARTUP

It’s finally happening. A clutch of Indian startups, after raising venture capital money, are now set to go public. And it’s happening fast.

On Monday, two digital payments firms — Mobikwik and Paytm — took a step closer towards their IPOs.

Mobikwik, started by Bipin Preet Singh and Upasana Taku in 2009, filed its draft red herring prospectus to raise up to Rs 1,900 crore through a public issue.

Meanwhile, Paytm shareholders approved the company’s resolution to raise Rs 12,000 crore by issuing fresh equity in its IPO.

A bit of history: Paytm and Mobikwik haven’t exactly been on friendly terms. In fact, Singh has taken several potshots at Paytm founder Vijay Shekhar Sharma, challenging his firm’s Indian credentials by citing the large stake China’s Alibaba Group has in it.

It’s worth noting here that Paytm and Mobikwik were once seen as competitors, before Paytm managed to corner significant market share in the e-wallet space while Mobikwik lagged behind.

Paytm is currently looking to take on bigger rivals such as Amazon, Google and PhonePe, while Mobikwik has tried pivoting to cross-selling financial service products. The company was written off by many as the digital payments landscape changed over the past few years. But here we are. It has made an offer to launch its IPO.

What’s on offer: Mobikwik intends to raise up to Rs 1,900 crore.

Of this, Rs 1,500 crore would be through issuing fresh shares, while Rs 400 crore would be through a secondary share sale (an ‘offer for sale’ in market lingo).

Who’s selling how much? Singh and Taku – who together own 34.5% of the company — plan to sell shares worth over Rs 191 crore in the secondary sale, while Sequoia Capital India and Bajaj Finance are looking to sell shares worth around Rs 95 crore and Rs 69 crore, respectively. The rest of the investors also plan to sell their stakes as part of the secondary sale.

Promoter-run firm: Unlike startups such as Zomato, which is planning to list as a ‘publicly managed company’, Mobikwik said in its DRHP that it will list as a ‘promoter-run company’. Paytm, as we have reported before, is planning to list as a ‘professionally managed company’. Sharma will cease to be the founder but will continue as its managing director and CEO.

Paytm’s IPO offer: After receiving shareholders’ approval for the fresh issuance of shares, Paytm was expected to file its DRHP on Monday itself. But now it seems this will take some more time. We don’t have the exact dates as yet as the company is giving the final touches to its DRHP and looking at all compliance parameters before submitting it to Sebi.

Besides the Rs 12,000-crore primary fundraise, Paytm’s IPO is expected to have a secondary component of around Rs 4,600 crore, in which investors will sell their stakes directly through the exchanges. This is likely to take the total offer size to Rs 16,600 crore, according to a source.

Valuation, revenue and loss: Paytm and Mobikwik are different in scale and so are the valuations they are seeking. Mobikwik, last valued at $700 million, wants to be valued at at least $ 1 billion for the IPO. Paytm, last valued at $16 billion, is seeking a valuation of $24-30 billion.

  • In FY21, Mobikwik’s total income was down 18% to Rs 302.2 crore, while losses widened to Rs 111.3 crore.
  • In comparison, Paytm saw a 14% drop in its consolidated revenue to Rs 2,802 crore in FY21 while its losses fell 42% to Rs 1,701 crore.

Flipkart’s valuation soars after $3.6 billion funding

Flipkart funding

Flipkart on Monday raised a whopping $3.6 billion, one of the largest investments in a private firm in India.

Why is it significant? This is the e-commerce giant’s first external funding round since it was acquired by Walmart in 2018. The deal values the company at $37.6 billion, up from the $24.9 billion valuation it commanded a year ago in a $1.2 billion internal round led by Walmart.

Who are the investors? The latest round was led by Canada Pension Plan Investment Board (CPP Investments), Singapore government’s sovereign wealth fund GIC, SoftBank Vision Fund 2 and Flipkart’s largest shareholder, Walmart. Existing backers such as Qatar Investment Authority, Tencent, and Tiger Global also participated.

SoftBank returns: Japanese tech conglomerate SoftBank has also re-entered Flipkart’s cap table after exiting the firm three years ago. The Masayoshi Son-led firm invested $2.5 billion in Flipkart in 2017 and sold its stake to Walmart a year later for $4 billion.

Esop buyback: Flipkart is also buying back employee shares worth over $80 million, providing liquidity to those who hold the company’s shares. Walmart is expected to have a stake of 74-75% in Flipkart after this funding round.

E-commerce rules: The investment comes as the consumer affairs ministry has proposed changes to India’s e-commerce rules. These include a ban on flash sales and curbs on in-house labels. Read our explainer on why e-tailers are upset over these draft guidelines.

Tweet of the day


CCI clears SoftBank’s investment in Swiggy

FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo

India’s anti-monopoly watchdog has approved SoftBank Vision Fund II’s request to invest in food delivery app Swiggy.

  • ET first reported on April 16 that the Masayoshi Son-led company was finalising a $450-million investment in the online food delivery platform at a pre-money valuation of $5 billion.

The funding is an extension of Swiggy’s $800-million round, which saw participation from investors such as Falcon Edge, Amansa Capital, Think Investments, Carmignac and Goldman Sachs.

New cofounder: Swiggy has elevated Phani Kishan, the company’s vice president for strategy and investments, to the position of cofounder. Kishan has been with the startup for over six years.

Meanwhile, the National Restaurants Association of India (NRAI) has filed additional information about food aggregators Zomato and Swiggy with India’s anti-monopoly watchdog.

NRAI submitted what they said was evidence of alleged “anti-competitive” practices by Swiggy and Zomato. It said these practices have forced many restaurant owners to work in “extremely stressful conditions” and put many establishments on the verge of closure.

Catch up quick: Last week, NRAI had sought CCI’s intervention to resolve what it alleged were anti-competitive practices by the food aggregators. These include bundling of services, masking user data, charging high commissions, deep discounting, and lack of transparency.

Last Thursday, when Zomato announced its plan to list on the national exchanges, CFO Akshant Goyal said NRAI’s concerns were “misplaced” in response to a question. He later said that sharing customer data with restaurants, another of NRAI’s demands, was not a good idea as it would leave the data open to abuse.


ISRO arm Antrix urges US federal court to stop Devas

Antrix Corp, the commercial arm of India’s space agency, has urged a federal court in Washington to block Devas Multimedia’s attempts to track down assets and enforce a $1.2-billion arbitration award won by the satellite firm in 2015.

  • The appeal by Antrix, filed in the US court last week, comes soon after Devas filed a motion in the same court, saying that the Indian Space Research Agency (ISRO) subsidiary is continuing to “dodge and duck” the arbitral awards.

Catch up quick: The litigation stems from the cancellation of a satellite deal between Antrix and Devas in 2011 that culminated in the arbitration award. ET reported on June 30 that Devas had filed a petition in a New York court seeking to seize the assets of Air India in the United States as reparations for India’s failure to honour the $1.2-billion arbitration award.

The satellite firm is the second company — after Cairn Energy Plc — to target the overseas assets of the beleaguered national airline to force the government to pay up.

In its petition before the NY court, Devas said that the airline is the “alter ego of the Republic of India” and “therefore jointly and severally liable for the debts and obligations of India itself”.

Infographic Insight

The two founders together own 34.5% in Mobikwik. Bajaj Finance owns 13.8%, while Sequoia Capital India has a 17.2% stake.

Mobikwik


IT executives get huge pay hikes

VC investment

In the current market, IT employees can demand hikes of up to 70% when switching jobs, compared to 15-30% before Covid-19, according to recruitment firms such as TeamLease, ABC Consultants, Quess, Taggd and Randstad.

High demand: This is true for those with experience in areas such as SaaS (software as a service), edtech, health-tech, gaming, artificial intelligence, machine learning, automation, digital transformation, blockchain and cybersecurity.

Quote: “It is a war for digital talent as corporates of all sizes are transforming businesses to go digital…this has been accelerated by the pandemic,” Nasscom senior vice-president Sangeeta Gupta told us.


ETtech Done Deals

Ola Electric has signed a 10-year debt financing deal of $100 million with the Bank of Baroda towards the funding and financial closure of the first phase of its two-wheeler electric vehicle factory. Ola Electric is building a 500-acre EV manufacturing site near Krishnagiri in Tamil Nadu, on the lines of Tesla’s Gigafactory in the United States.

■ Influencer-led social commerce platform Trell has raised $45 million in a Series B funding round from Mirae Asset, H&M Group and LB Investments at a post-money valuation of $120 million. Existing backers along with KTB Network, Samsung Ventures, and Fosun RZ Capital also participated. Some early-stage investors sold stock worth $5 million. The startup has raised more than $62 million so far.

■ South Korean gaming firm Krafton may invest more than the committed $100 million in India, its division head in the country told ET. The company recently announced an investment in game streaming platform Loco and said it would chip in more if the right opportunity came up.


Other Top Stories We Are Covering

Battlegrounds Mobile India records 34 million players within a week of launch: South Korean video game developer Krafton said that Battlegrounds Mobile India has surpassed 34 million registered users within a week after its release via Google Play. The game is still to be launched on Apple iOS. Following a formal launch on July 2, the company has recorded 34 million registered users, a peak of 16 million daily active users, and 2.4 million peak concurrent users.

Amazon Web Services partners low-code platform Zvolv: Zvolv, a no-code intelligent process automation platform, said it was collaborating with Amazon Web Services (AWS) to enable mid-sized and large enterprises to rapidly build smart applications that will address their last-mile digital transformation challenges. The growing demand from businesses for Cloud-based process automation solutions has fuelled this collaboration.


Global Picks We Are Reading

  • ByteDance shelved IPO intentions after Chinese regulators warned about data security (WSJ)
  • WhatsApp targeted in EU consumer complaints over privacy changes (Reuters)
  • Facebook and Twitter under fire after England soccer players face racial abuse online (CNBC)

Source link