In a candid interview with Moneycontrol, Grover who has also been an investment banker spoke about Paytm's disappointing debut on Dalal Street, why the issue bombed, how this will impact the other tech IPOs including Softbank-backed Oyo and Ola in the near future.
Edited excerpts.
A. Everything is going to get priced down. No more fin-tech IPOs are going to happen from here till the next cycle. With what is happening with Paytm, no fin-tech in India can list in the current market. I am absolutely clear. This brings down the curtains on the IPO market for this cycle.
I had personally told Policybazaar CEO (Sarbvir Singh), do whatever you do but list before Paytm. Thankfully, he listened to me and closed his IPO before; otherwise, it would have been a very different story for Policybazaar.
Q. What about Oyo and Ola?
Kuch nahi hone wala hai is market me kuch nahi aa sakta. (Nothing is going to work in this market).
Investors are sitting in the US. Those who want to invest in the Indian market will ask how the market is right now. Then they will ask how the biggest IPO has fared. That is 40 percent down. It was also the biggest start-up with the highest valuation. People will say ye to discount lag gya (this got discounted).
Many DRHPs will expire now. Especially in fin-tech, I am 100 percent sure.
Q. What about venture capital funding in startups? Do you think that will also get impacted?
A. Absolutely. Jo tezi capital market se ayi thi wo slodown bhi capital market ki oor se hi ayega na (the funding frenzy had come from the capital market, the slowdown will also come from there) Earlier people earned good money from IPOs and then invested in startups at high valuations. Now those who have lost money will also say going forward that the market is low, so I will give it for less price or that I do not want to do a risky deal.
Q. To what extent do you think companies that got listed will get impacted?
A. They will come down from an all-time high. But I think those are still much better companies and they are listed at a good price. Zomato and Nykaa’s stocks are trading almost at double the price. Even if they come down they will trade at 40-50 percent. People will get very good points to enter good companies going forward.
Q. What do you think went wrong?
A. You did a Rs 18,300 crore IPO out of which 55 percent was secondary. You did a price optimisation. It’s the Chinese investors who sold their shares through this IPO. Indian market ko kharab karke apne Chinese investors ko unka paisa wapas diya hai. (You disrupted the Indian market to return Chinese investors’ money)
Q. Bankers earned Rs 300 crore from this deal, right, why didn't they see this coming?
A: That's exactly my problem. Unko Rs 300 crore mil gye na. unko kya fark padta hai. Unko to IPO karne ke liye paise mil rhe hain (They got Rs 300 crore. Why should they be bothered. They got the money to conduct the IPO).
I think now SEBI should get into it. Companies that are not profitable should not be allowed to do secondary beyond 25 percent.
Q. How will other Softbank-backed companies get impacted in India, especially those in talks to raise money from other investors?
A. Companies that haven’t raised money are in big trouble whether they are public or private.
Q. You didn’t apply for Paytm. What motivated you from staying away from Paytm?
A. I wish everyone the very best but I would invest my money where there is conviction. If Paytm had issued a $10 billion IPO, mai personally Rs 500 crore ki application lagata (I would have personally applied for stocks worth Rs 500 crore). For $20 billion I wouldn't even spend a penny.
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