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EXCLUSIVE | SoftBank-backed Delhivery may delay planned IPO amid choppy market conditions

Delhivery on November 2, 2021 filed its documents with the market regulator, seeking to raise a billion dollars in an initial public offering (IPO), at a valuation of around $6 billion.

January 27, 2022 / 09:04 PM IST
Representative image

Representative image

E-commerce logistics firm Delhivery may delay its initial public offering (IPO) by a few weeks amid a highly volatile market, at least three people familiar with the development told Moneycontrol, adding that it is still aiming to list before the end of the current financial year, in March 2022.

"Merchant bankers have advised the company to wait for a month or two due to the current market conditions. They also want to avoid a clash with the LIC IPO, which is expected in the first week of March," one of the persons cited above said.

The listing of LIC is poised to be India's biggest IPO to date, with the government looking to raise up to Rs 1 lakh crore by selling shares. That would beat by roughly five times the Rs 18,300 crore that payments company Paytm raised in November.

A second source said, "Considering the beating that loss-making tech and internet companies have taken in the current market, they wouldn't want to list with a downside, like what happened with Paytm."

The company did not respond to queries sent by Moneycontrol.

Delhivery on November 2, 2021, filed its documents with the market regulator, seeking to raise a billion dollar in an IPO, at a valuation of around $6 billion. The deal will mark a lucrative exit for many of its investors, make some employees rich, and serve as a barometer to measure India's startup and tech sector's success.

Also read: Decoding Delhivery's IPO prospectus in five charts

It received approval from market regulator Sebi earlier this month for the listing. Companies typically have at least a year post-approval to list but Moneycontrol has learned from sources that Delhivery is keen to list this financial year itself and may time its IPO in the second or third week of March, once the LIC IPO is out of the way. It had originally planned to list in the first week of February.

While Zomato, Nykaa, and Paytm were some of the most anticipated Internet IPOs last year, Delhivery was expected to kick off the listing this year. Delhivery, which counts the likes of SoftBank, Tiger Global, Nexus, and Times Internet as investors, positions itself as a technology company that uses extensive automation, elevating it from being merely a logistics company. Its IPO consisted of primary issuance of Rs 5,000 crore and an offer for sale by the existing investors to the tune of Rs 2,600 crore.

Technology stocks in India and the US have taken a beating, leading investors to wonder whether the epic bull run leading to unheard-of valuations, massive deals for unprofitable companies, and a party fueled by rock bottom interest rates may be ending.

Also read: As tech stocks fall, investors wonder if the party is over

Newly listed internet companies including the torchbearer Zomato, along with Policybazaar, Nykaa, CarTrade, and Paytm have fallen between 10-30 percent in the last 5 days, data indicates. From their listing highs, they have fallen as much as 50 percent, with billions in market cap evaporating and shifting investor sentiment. Paytm, whose shares have anyway been falling since it listed, is now valued at $8 billion, half its last private round at $16 billion.

Indian technology stocks have followed their US peers, where shares of companies such as Robinhood, Lyft, and Peloton have fallen sharply. Peloton, whose fitness bikes and treadmills became a pandemic favourite, has fallen over 80%.

Due to low-interest rates in the US and other countries, investors increased their allocation to riskier sectors such as technology, eyeing better returns than traditional asset classes. Now, as inflation rises, central banks may hike interest rates again, reducing the money available for tech companies, and leading to a selloff.

The domestic equity market came under immense selling pressure on January 27 tracking similar cues from other Asian markets as investors were spooked by the commentary of US Federal Reserve Chairman Jerome Powell after the central bank’s monetary policy statement on January 26.

In the early morning session on January 27, the Nifty 50 index plummeted 280 points, or 1.6 percent, to 16,997, while the BSE-Sensex was at 57,031, down 1.4 percent or 826 points.

While the central bank kept the benchmark interest rate unchanged and suggested that it will be “appropriate” to raise rates soon, Powell’s hawkish commentary on the scope of monetary policy tightening going ahead troubled investors.

Chandra R Srikanth
Chandra R Srikanth is Editor- Tech, Startups, and New Economy
first published: Jan 27, 2022 07:04 pm