Debasish Purohit, MD, India Investment Banking at Bank of America remains upbeat on India's fintech ecosystem despite the weak response for unicorn IPOs and Paytm’s lacklustre performance on its market debut.
In an interview with CNBC-TV18, Purohit spoke on Delhivery listing, whether the weaker-than-expected listing of Paytm could impact upcoming startup IPOs, and trends driving the fintech revolution.
Emphasising that companies are not shelving the idea of raising funds through IPOs, Purohit said fund-raising through IPOs was at a record in the last six months in India. He said startup companies raised Rs 5.4 billion through IPOs in the calendar year 2022.
Speaking on Gurugram-based Delhivery's successful IPO, he observed that due to its mature business model, it is now a fully integrated logistics service player in India.
He further stressed that as newer companies aim to improve the usage of financial services, India is at the forefront of a fintech revolution.
Edited excerpts:
You have worked on so many IPOs for the last many years. And, it has been a meteoric rise for unicorn space. After Delhivery, a small pocket was available for unicorn space. Delhivery is holding above its IPO price. Does it really give confidence to some of the other players looking at IPO opportunities?
In the US, across 15 companies, their IPOs have raised $4 billion. India is already $5.4 billion in just five months. I don't think I have seen this in my lifetime, in a particular time window. This surely gives us hope. Delhivery is a strong player in logistics area. It gives a template of what we can expect in the next few months. This is a company that is competitive, leadership is strong. The valuation framework has shifted dramatically. Every single IPO going out is testing these parameters. There is hope. The IPO market is open. The shift has changed in favour of investments.
Delhivery also had to bring down valuation expectations. But, one criticality was retail and low HNI participation. But, it still pulled it off because of the anchor book participation. Is that the model now for companies that think that the business model could be well understood by the markets and their investors? Which sectors are still looking for IPO opportunities?
The selling shareholders or investors who came in first are smart individuals. They have seen market cycles throughout their career. Anyone shelving the idea of monetising, positions or helping companies go to public markets, it is but a matter of time. The retail and HNIs have an unusual love-hate relationship with public markets or primary markets. And, they are driven by sentiments. We have to respect their sentiments and move on. Delhivery hopes that it will continue to do well quarter on quarter. And, over a period of time, HNIs will come back. I am not terribly disappointed. Plans for IPO are on. We are adjusting the time horizon accordingly.
What is the impact of one particular event - the effect of Paytm on a particular sector. What are the prospects of any of those kinds of tech companies coming to the market now or in the near future?
I am a big believer of the Indian fintech story. In the last six months in the US, the broader fintech has come off. Stronger payment-driven, B2B businesses have done well. They are in financial services at a cheaper cost to those who are unserved. It uses the humongous amount of data to curate financial products and they are more of need-based.
Are there any fintech companies in the IPO pipeline?
I can't talk about specifics but one would see them coming. The valuation framework changes over a period of time. The companies are sensitive to what is happening across the globe.
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