Major internet-based companies in the country are set to launch initial public offers (IPOs) in the next two-three years, including e-commerce company Flipkart, education technology start-up Baijus, food delivery company Jomato and cab aggregator company Ola. The total valuation of these companies is expected to be up to $ 100 billion from the IPO.
According to industry insiders and analysts, these companies are focusing on consulting with their finance and legal teams by diversifying into new business areas to create a path to profitability to get listed in India or abroad. Walmart-owned Flipkart and digital payment company PhonePe plans to bring a public issue to the US by 2022. Sources said Flipkart is eyeing a valuation of around $ 40 billion for the IPO. He said PhonePe plans to bring in a public issue as a separate entity and is targeting a valuation of around $ 10 billion. In July, Walmart, the world's largest retailer, invested $ 1.2 billion in Flipkart, bringing the e-commerce company's value to $ 24.9 billion. In 2018, when Walmart invested $ 16 billion for a majority stake in Flipkart, the Bangalore company was valued at less than $ 21 billion.
An official aware of this said, "The leadership of Walmart has instructed Flipkart and PhonePe to make a path to profit and has said that they want these companies to bring their public issue and all the support for it Is going.' In addition to e-commerce, Flipkart is expanding its footprint in the Indian financial services market to be valued at $ 340 billion over the next few years, sources said. Flipkart's financial technology category increased to 40 percent in 2019, including consumer credit constructs, equipment insurance, and vendor financing. The company wants to connect around 200 million consumers online and aims to increase the number of users using financial technology products and services. It also includes medium and small towns.
Due to the Covid-19 epidemic, the attention of e-commerce has increased as consumers are shopping online in large numbers. The gross merchandise value (GMV) of the products sold on Flipkart had crossed the earlier level of Covid. The annual GMV of e-commerce companies from the upcoming festival sales is expected to be around $ 38 billion, a 40% increase over the previous year. The festive season sales of e-commerce alone can cross the $ 7 billion mark. This season will be a major indicator of consumer spending and Flipkart's ability to bring in public issues.
Satish Meena, a senior forecast analyst at Forrester Research, said, "The question is whether Flipkart will be able to get the valuation it wants as their competition is getting tougher due to Amazon and Reliance's entry into Geomart." Meena says that they are more hopeful about the IPO of Baijus.
The epidemic led to Baijus becoming a company worth more than $ 10 billion this year. According to analysts, Baijus has a better chance of bringing in a public issue as the company almost doubled its revenue in FY 2020 from Rs 1,430 crore to Rs 2,800 crore. It is now moving towards achieving revenue of $ 1 billion. He added that the Bangalore-based company, which is valued at $ 11.1 billion, could target valuations of up to $ 25 billion for listing in the US. Baijus' IPO will also help because it has acquired WhiteHat Jr. which teaches kids coding and has also acquired Osmo, the US educational gaming company. In a recent interview, the company's founder and CEO (CEO) Baiju Ravindran said that the IPO is a clear choice for the company. "It is a big ambition to make the company a big public company outside India," he said.
Pahwa, partner and national leader of e-commerce and consumer internet at advisory company EY India, said investors' perceptions of the current geopolitical situation to provide access to capital for start-ups in a high-growth, fast-paced innovation environment Creating obstacles. He said, "The listing of the IPO will allow both investors and entrepreneurs to capitalize on the growth potential." Food delivery company Zomato has also gained momentum due to the Covid-19 epidemic. Recently, Jomato co-founder and CEO Deepinder Goyal had told employees via email that the company was planning to launch an IPO next year. Goyal said that the company has about $ 250 million in cash in the bank, which is the highest in its history. Major investors such as Tiger Global, Temasek, Bailey Gifford, and Ant Financial participated in the current round and they estimate the bank's cash to be up to $ 600 million.
Zomato, affected by the lockdown, said in May that it would remove 13 percent of its workforce, affecting about 520 employees. But in July, the company said that its revenue for FY 2020 increased by 105 percent to $ 394 million, while the loss increased by nearly 6 percent to $ 293 million. HSBC Global Research recently pegged Jomato at $ 5 billion, a major increase from the earlier valuation of $ 3.5 billion. Analysts said Zomato could aim for a valuation of around $ 7 billion for its listing. Meena said that the scale for Indian companies for listing abroad could be companies in markets like China and the US. These include China's e-commerce company Pinduoduo (PDD) and food delivery company Meituan Dianping.
Softbank-backed cab aggregator company Ola is also planning to launch its IPO in India in the next few years. The Bangalore-based company is competing with US rival Uber, which saw a slowing of its IPO last year. During the lockdown, Ola witnessed a severe slowdown. In May, Ola fired 1,400 employees from more than 33 percent of its workforce as the Covid-19 stalled the transportation industry.
But now the situation seems to be improving. The company is serving more than 50 percent of passengers in most major cities as compared to the pre-Covid era. Ola's last valuation was around $ 6 billion. Analysts said it could target valuations of about $ 12 billion for listing.
Pahwa of EY said, "Listing in foreign markets will also help to appeal to a wider investor base and will provide more avenues for existing investors to exit."
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