Also in this letter:
Swiggypilots direct-ordering product in Mumbai
- India largest source of info requests from govt:
UPImandates expose India’s digital divide
Retail investors devour Zomato shares on day 1 of IPO
Yesterday, which began with Zomato’s chief executive Deepinder Goyal ordering three breakfasts, ended with his company’s share issue subscribed 1.05 times on the first day of its historic IPO, the first domestic listing by an Indian startup unicorn.
Retail investors show interest: Only 10% of Zomato’s issue has been reserved for retail investors, but they clearly want more.
The details: The retail investor issue was subscribed 2.7 times, meaning there were almost three times as many bids as there were shares available.
- The qualified institutional buyer (QIB) portion was almost fully subscribed at 98%.
- Non-institutional investors (NII) subscribed to 12% of their portion of the issue.
- Zomato employees bid for 18% of their allocation.
Anchor investors: Zomato had already raised Rs 4,197 crore (almost 45% of its total offer size) from a record 186 anchor investors ahead of its IPO. Existing backers Tiger Global, Kora, Fidelity also invested in the anchor issue at Rs 76 a share through their public market funds. New World Fund, Baillie Gifford, Morgan Stanley, CPPIB, GIC, Kotak Flexicap Fund, are some of the leading funds that picked up shares from the anchor placement.
Journey so far: We track the company’s evolution from its Foodiebay days to a food delivery service in 525 Indian cities and towns.
Reactions: Infosys cofounder Kris Gopalakrishnan said, “We want more startups to launch IPOs and have access to capital through this route as well. This could also give exits. It’s also good for the public, which will get to own some shares of successful startups. I am glad about the Zomato listing and expect more startup IPOs going forward.”
Snapdeal cofounder Kunal Bahl said that Zomato’s public offering shows that “founders should not shy away from transformations if that’s what’s needed. In the end, it can be rewarding”.
Hitesh Oberoi, MD and CEO of Info Edge, Zomato’s largest shareholder, wrote, “Deepinder – It’s been amazing to see your crazy journey from the sidelines. Still remember the early discussions with you and @pankajchaddah. As you take the big leap, wishing you and team Zomato all the best. And thank you for creating value for InfoEdge along the way.”
Pankaj Chaddah, who launched Zomato with Goyal and left the firm in 2018 to launch a mental wellness venture, wrote: “The IPO is a huge validation of the value created through the years, and is a landmark event for the startup ecosystem. Feeling extremely lucky to have been a part of the journey. Keep showing the way!”
Swiggy’s ties up with restaurants for direct ordering
Swiggy is piloting a direct-ordering product called Swiggy Direct in Mumbai, for which it has struck deals with various restaurants.
Why now? This comes days after the National Restaurant Association of India (NRAI), which represents over 500,000 restaurants across the country, submitted additional information to the Competition Commission of India about what it alleged were “anti-competitive practices” by Swiggy and Zomato. The association also alleged that the companies delisted restaurants if they offered customers better rates through other channels.
What’s the plan? Swiggy is expected to charge a base fee of 2.5% to cover the cost of direct ordering and pass on the 2% payment gateway charge to partners. There will also be a Rs 30 base delivery fee. If a new customer ends up on Swiggy using the direct ordering link, it will forgo commissions and flat fees from the restaurant for the next 30 days.
Thrive, a competitor in the direct ordering space, charges a 3% commission, while another 1.5-2% goes towards payment gateway fees.
Under Swiggy Direct, the company has also committed to sharing customer data with the restaurant, which will have to ensure that it is not shared with a third party.
Also Read: Restaurants bypass Swiggy, Zomato for more than just cost savings
Tweet of the day
Twitter says India largest source of info requests from govt
India is the single largest source of government information requests, accounting for 25% of global volume and 15% of accounts specified, Twitter disclosed on Wednesday under its bi-annual transparency report for July to December 2020.
On the number of legal demands, India ranked second after Japan. Almost 94% of the total number of legal demands originated from just five countries: Japan, India, Russia, Turkey, and South Korea, Twitter said.
UPI mandate success rates expose India’s digital divide
A flurry of digital mandates for top-flight IPOs has highlighted the gap in technology infrastructure between large private sector banks and their smaller public sector counterparts. The UPI mandate success rates in public sector banks are far lower than at leading private sector banks, data sourced from the National Payments Corporation of India showed. NPCI made this data public for the first time this month.
Small public sector banks
Punjab National Bank: 43.51% success rate
Indian Overseas Bank: 37.76%
Mehsana Urban Co-Op Bank: 60.62%
Larger public sector banks
State Bank of India: 84.63% success rate
Bank of Baroda: 82.29%
Bank of India: 86.89%
Private sector banks
HDFC Bank: 90.35% success rate
ICICI Bank: 92.23%
Axis Bank: 88.66%
Kotak Mahindra Bank: 92.22%
With several high-profile IPOs, such as those of Life Insurance Corp of India (LIC), Paytm and Mobikwik lined up this fiscal, the urban-rural disparity in failure rates could be a cause for concern, a payment industry executive told us.
Also Read: RBI bars Mastercard from signing on new customers
Infosys forecasts 14-16% revenue increase
Infosys said it will grow at an even faster pace in the year ahead and forecast a revenue increase of between 14-16%. India’s second largest software exporter snagged deals worth over $2.6 billion in the first quarter of FY22.
What are analysts saying? Analysts say that while Infosys’s healthy revenue growth has beaten their expectations, the company’s lower margins — due to higher subcontractor expenses — are below their estimates. However, the software services major is tipped to outpace rivals, based on its strong deal wins in a market buoyed by investment in digital transformation.
We earlier reported that India’s $150-billion IT services sector is expected to see a “five-year mega growth” cycle owing to the speed at which American businesses are going digital, following US President Joe Biden’s executive order last week to increase competition in the US economy.
Hiring plan: Infosys said it has plans to hire 35,000 freshers globally during the year, and that it hired 10,000 people in the first quarter.
ETtech Done Deals
■ Online storytelling platform Pratilipi has raised $48 million (about Rs 357 crore) in its Series D round, led by South Korean gaming company Krafton Inc. Existing investor Omidyar Network India also participated in the round, along with a clutch of startup founders.
■ Agritech startup Aqgromalin, said it has raised Rs 5.5 crore in seed funding round led by Zephyr Peacock India Growth Fund. Indigram Labs Foundation and other noted angels from the agri startup ecosystem also participated in the round.
Other Top Stories We Are Covering
CCI directs MakeMyTrip to relist properties of Treebo, FabHotels: The Competition Commission of India (CCI) has directed online travel platform MakeMyTrip to relist the properties of Treebo and FabHotels in four weeks, providing some interim relief to the two chains. On Tuesday, the provisional directions were given by India’s competition watchdog after both MakeMyTrip and Oyo conveyed that they had no objections to relisting Treebo and FabHotels properties on the former’s platform.
Karnataka allows electric bike taxis: Karnataka on Wednesday permitted electric bike taxis to operate in the state.
This has effectively ended a standoff between bike taxi operators such as Rapido and the state and comes after the Karnataka High Court recently ordered the government to clarify its stand on allowing motorcycle taxis after companies had filed a case in this regard.
Gartner forecasts India IT spending to grow 8% in 2021: India IT spending is expected to grow 8% to touch $92.7 billion this year, Gartner Inc has forecast. Worldwide IT spending is projected to reach $4.2 trillion in 2021, an increase of 8.6% from 2020.
Microsoft to offer cloud-based version of Windows: Microsoft Corp on Wednesday said it will offer its Windows operating system as a cloud-based service, aiming to make it easier to access business apps that need Windows from a broader range of devices.
Global Picks We Are Reading
- Facebook users said no to tracking. Now advertisers are panicking (Bloomberg)
- Facebook asks for US FTC Chair Lina Khan’s recusal (Reuters)
- Facebook and Instagram will invest over $1 billion in content creators (Reuters)
Today’s ETtech Morning Dispatch was curated by Zaheer Merchant and Karan Dhar in Mumbai.