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Sanjeev Bikhchandani: Zomato a validation, public proof of what we knew and believed all along

If you pre-decide which sectors to invest in you are limited by your imagination. You simply keep an open mind and meet a thousand entrepreneurs and then figure out who to back -- bottom up is better than top down, Info Edge Founder Sanjeev Bikhchandani says.

July 28, 2021 / 12:12 PM IST
Zomato's Deepinder Goyal with Sanjeev Bikhchandani and Mohit Bhatnagar on the first day of the IPO launch (Image: Twitter/@sbikh)

Zomato's Deepinder Goyal with Sanjeev Bikhchandani and Mohit Bhatnagar on the first day of the IPO launch (Image: Twitter/@sbikh)

 
 
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Info Edge, one of the biggest promoters of Zomato, sold 3.32 percent stake in the food delivery giant via initial public offering (IPO) and currently holds 15.23 percent.

Sanjeev Bikhchandani, Founder and Executive Vice Chairman of Info Edge told Moneycontrol’s Nisha Poddar that invest smartly in startups and over a decade or so you will strike gold. Zomato is a shining example of this. Edited excerpts:

Q. Info Edge has emerged as a key proponent of large Unicorns in the country, what are the triggers of growth for the company from here on?

A. The triggers of growth for Info Edge remain the same as they always were. We are largely an operating company with four verticals – jobs, real estate, matrimony and education classifieds. Naukri is the bedrock on the basis of which everything else has been built. If there isn’t a debilitating third wave of Covid we expect decent growth in these four verticals this year.

What the Zomato IPO has conclusively proved however is that investing in start-ups is now an established fifth vertical of Info Edge – whether from our balance sheet or through Info Edge Ventures. It started in 2007 as a small cottage sector type of experiment and is now a full blown serious activity that is creating value for our shareholders alongside the four operating verticals.

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Q. What does the success and valuation of Zomato mean for Info Edge as a large investor?

A. It is the ultimate validation and public proof of what we knew and believed all along – invest smartly in start-ups and over a decade or so you will strike gold. These start-ups will go on to become giants and will create new industries, categories and business models. They will create jobs and deliver growth. They will power the industries they serve in. They will create greater customer satisfaction and choice. And they will ultimately create value for our shareholders. Zomato is a shining example of this.

Zomato has also conclusively bust the myth that Indian start-ups need to flip to an overseas domicile and list outside of India. Zomato had a clear choice to follow that path. They declined and decided to stay in India. The results are there for all to see.

Q. What will be the strategy of Info Edge for Investee company Zomato post it’s listing?

A. Listing is not an end in itself. It is however a significant intermediate milestone. It must be kept in mind that great companies last for a hundred years or more – they outlive their founders. They continuously innovate and renew themselves and stay relevant and in leadership positions in their sectors.

Deepinder and the Zomato team in no way believe that the work is even half done. In fact it has just begun. We were there at the Zomato office last Friday on the day of the listing. The mood was celebratory. However Deepinder told us “We celebrate today. From Monday, we start working twice as hard”.

Deepinder and I have been speaking over the weekend – he was already hard at work as was the Zomato core team. As far as Info Edge is concerned – we are remaining invested. There is great potential.

Q. Another investee company Policybazaar will soon kick start its IPO process, what’s Info Edge strategy on sale of shares via IPO?

A. The proposed Policybazaar IPO is work in progress. We are therefore not at liberty to speak about it. However I would like to emphasise that we have complete faith and confidence in Policybazaar and while our board will take the final decision, we will continue to be long-term shareholders in the company.

Q. How does Info Edge view the two companies on bourses and investors creation metrics?

A. We are delighted and proud that two companies that we were the first investors in have grown to scale and maturity, have built rock-solid businesses, are household brands, have innovated, have attracted investments from the best investors in the world and are still growing fast.

That one has gone public and the other is likely to go public is a testimony to the quality of the founders and the management teams there. It is a matter of great satisfaction and pride for us that the Zomato market cap on the opening day of listing was higher than that of Info Edge.

Q. Looking at the full portfolio of companies under Info Edge, where will the next growth come in?

A. The operating businesses (Naukri, 99acres, Jeevansathi and Shiksha) will grow. Among the investments there are several that are showing promise apart from Zomato and Policybazaar. Some of them are Bijnis, Shopkirana, Gramophone, No Paper Forms, Ustraa, Shipsy, Shopkirana, Medcords, Dotpe, TrueMeds and Udayy. And then there are several others that we have invested in only recently but business growth has been very promising.

Q. What are the new areas of investments you are eyeing at this point?

A. We don’t do our investing top down by identifying sectors and then looking for start-ups in those areas. If we had followed that approach we would never have invested in Policybazaar and Zomato all those years back.

For the life of me if we were identifying sectors we would never have identified non-existent sectors such as restaurant listing and insurance comparison. Pioneering entrepreneurs deliver outlier results over a decade or more. These are people who are doing things that others haven’t done before them. They create new categories and sectors. You cannot find them by looking at existing sectors. If you pre-decide which sectors to invest in you are limited by your imagination.

You simply keep an open mind and meet a thousand entrepreneurs and then figure out who to back. That way you are harnessing the imagination of so many more young people, many of whom might be brighter than you are. Bottom up is better than top down.

Any other portfolio company listings expected in the near term of 2 years?

The others will take some more time. It is too early to say.

Q. Will Info Edge play the role of a consolidator in the present online M&A theme?

A. We are acquiring companies cautiously and sensibly – IIMjobs, Zwayam, doselect are three such.

Q. What’s your view on sustainability of valuations of loss-making internet companies in the stock market, what is critical and needed to create stakeholder value?

A. Many of the companies that are going to list have visibility of profit within the next two to three years. And that is good.

Also read: Zomato IPO sets up a new role model for Indian startups

 
Nisha Poddar is an Editor-M&A, CNBC-TV18
first published: Jul 28, 2021 11:39 am

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