Food-delivery app Zomato becomes first to make stock-market debut, raising $1.3bn
19 July 2021 - 10:00People walk at a crowded market in the old quarters of Delhi, India. Picture: REUTERS/Anushree Fadnavis/File Photo
The parent of digital payments start-up Paytm filed a draft prospectus for what could be India’s biggest IPO at $2.2bn, while retailer Flipkart Online Services raised $3.6bn at a $38bn valuation, a record funding round for an Indian start-up. Unlike China, where online usage is much more developed, many of India’s 625-million internet users are just dipping their toes into the world of video streaming, social networking and e-commerce. Opportunities in online shopping are particularly attractive, as e-commerce accounts for less than 3% of retail transactions. Tech start-ups in India are still paying to build supply chain and delivery networks.
Indian tech companies “can attract global investors who’ve burnt their hands in Chinese tech companies”, said Nilesh Shah, group president and MD at Kotak Mahindra Asset Management in Mumbai. The successful listing of a few loss-making start-ups could lead to rerating of many existing companies and send the market higher, he said.
“$1bn is the new $100m,” said Krishnan Ganesh, a serial entrepreneur who now promotes companies that have attracted investors such as Sequoia Capital, Lightspeed Venture Partners and Qualcomm Ventures. “Global investors see the potential upside in India’s huge, underpenetrated market and capital flows have multiplied 10 times.
“Many of these businesses are in habit-forming stage of acquiring customers and hence the losses can be front-loaded,” said Ramesh Mantri, a director of investments at Mumbai-based White Oak Capital. “What really matters is the potential to generate cash flows.”The new ventures also have competitive advantages over many traditional bricks & mortar rivals, which have high real estate costs and often suffer from broken distribution chains and complicated structures.
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