Are Startup IPOs Back on Track? Negative sentiment because of the global downturn has kept startups away from pursuing their IPO dreams

While the pandemic is over for most people, for startups, this is one of the toughest periods in many years since the inception of the ecosystem. In fact, during the pandemic, tech companies across many sectors flourished. However, today, they are facing the hard reality of funding winter. Many startups, that either announced initial public offering (IPO) plans or filed DRHPs or received the market regulator's approval, have deferred their IPO plans.

Negative sentiment because of the global downturn is one of the key reasons behind doing so. "They would rather invest in traditional companies, which are profit-making. But it is only one of the reasons. The timing is also not right considering recession and global stock market meltdown that is looming around us, apart from rising Inflation, geo-political turmoils, and US markets taking a beating, and foreign investors taking out money from the country," said Mohamad Faraz, founding partner, Upsparks.

However, there are some startups that are still going ahead with their plans and there are some more that have announced their plans.

Here is the status of the IPO plans of top-tier startups, which either announced IPO plans or filed draft red herring prospectus (DRHPs) or received the market regulator's approval in 2022 and 2023.

Ola Electric

The company recently engaged investment banks Kotak Mahindra Capital and Goldman Sachs for an IPO in early 2024 to manage the share sale. "Ola Electric has not finalized how much it plans to raise in the IPO or what valuation it will seek, but it will aim for a valuation higher than $5 billion. If it sells 10% in the IPO - the minimum legally required to list - at that price, this could be India's biggest IPO this year amid tepid market conditions. Filing its draft documents, marketing to investors and listing by the end of the year will be difficult," said a close source aware of the matter as per the report.

Yudiz Solutions

The gaming-focused enterprise technology startup recently received NSE approval for an SME IPO. With this approval, the company is set to invest approx INR 80 million to set up a gaming studio and a multi-gaming platform. The game studio will aim to produce over 40 games in a year.

boAt

In January 2022, the company filed INR 2,000 Cr DRHP with the market regulator SEBI. The parent company of the audio & wearables brand, Imagine Marketing, raised INR 500 crore from existing shareholders, a Warburg Pincus affiliate, and new investor Malabar Investments in October last year and also put on hold the IPO plan. According to sources quoted by many media houses, it was likely to reconsider the plan in about a year.

Mamaearth

In March this year, unfavorable market conditions pushed Indian skincare firm Mamaearth to delay its IPO. It filed the Draft Red Herring Prospectus (DRHP) for its IPO on December 30, 2022, with SEBI. Through the IPO, Mamaearth WAS looking to raise around INR 2,900 crores.

Go Digit

Last month, Go Digit General Insurance Ltd refiled its preliminary IPO papers with SEBI after making certain changes to its employee stock appreciation rights scheme, according to media reports. SEBI returned Go Digit's draft IPO papers on January 30 and requested that the company resubmit them with specific modifications.

Navi Technologies

In September 2022, Bangalore-based Navi Technologies' proposal for an IPO was cleared by SEBI. The Sachin Bansal-led firm had filed its draft red herring prospectus in March, proposing to raise INR 3,350 crore through its IPO.

Paymate

In January this year, fintech player PayMate India said it would refile the draft IPO papers with markets regulator SEBI after receiving final authorization from the RBI to operate as an online payment aggregator. The company was reportedly asked to update DRHP with final payment aggregator authorization and other material updates if any.

Pharmeasy

In August last year, API Holdings Ltd., owner of online pharmacy PharmEasy withdrew its preliminary filing for an IPO, giving market conditions and strategic considerations as reasons behind the decision.

Droom

In October last year, online automobile marketplace Droom Technology Pvt Ltd withdrew its proposed initial public offer, which was looking to raise up to INR 3,000 crore. In July 2021, Droom turned unicorn after raising $200 million in a funding round at a valuation of $1.2 billion.

OYO

According to media reports, OYO has refiled its DRHP with the SEBI under the confidential pre-filing route introduced in November last year. The travel tech platform was reportedly asked to update information such as updated risk factors, key performance indicators (KPIs), outstanding litigations and basis for valuation.

Snapdeal

In December 2022, Snapdeal announced to shelve a $152 million IPO. The company filed IPO regulatory papers for approval in December 2021. According to Snapdeal spokesperson, the company may reconsider an IPO in the future, depending on its need for growth capital and market conditions.