More than 75 anchor investors have contributed about INR 5,085 crore (about $600 million) to Swiggy, one of the top food and grocery delivery services in India. The Bengaluru-based business, which rivals Zomato, which is run by Deepinder Goyal, revealed the investment in a stock exchange filing on 5 November 2024.
Specifications of the IPO: Scale and Composition
The INR 11,327.43 crore Swiggy IPO consists of a primary issuance as well as a secondary offering by current shareholders. The secondary offering, also known as the Offer for Sale (OFS), is worth INR 6,828 crore, while the primary issue, or fresh money raise, is worth INR 4,499 crore.
Second only to Zomato’s public debut in 2021, this IPO is anticipated to be among the biggest in India this year and among the largest in the food technology sector. Swiggy wants to be valued at INR 87,300 crore ($11.3 billion), which is at the upper end of the pricing range of INR 371-390.
Important Investors and Allocation Information
Swiggy’s anchor segment has been supported by a wide range of domestic and foreign investors, with a sizable percentage of the shares going to Indian institutions. SBI Mutual Fund, Kotak Mutual Fund, HDFC Life, and Axis Mutual Fund are examples of domestic investors.
By indicating strong institutional backing, the anchor allocations are intended to stabilise the IPO and perhaps draw in more retail and non-institutional investors.
Evaluation and Financial Performance
Swiggy has prioritised expansion, as seen by its most recent financial reports, which show notable advancements. Swiggy reported revenue of INR 11,247 crore for FY24, up 36% from INR 8,265 crore for FY23.
In comparison to the prior fiscal year, losses also significantly decreased, falling 44% to Rs 2,350 crore. The business’s future growth, especially in its network of dark stores, as well as investments in marketing, technology, and possible acquisitions, will be financed by the IPO proceeds from the main issue.
In an attempt to fortify its position against its main rival, Zomato, which has a market worth of INR 2.1 trillion, or INR 2.18 lakh crore (as of November 6, 2024), Swiggy has entered the public market.
Current Anchor Book Investors
Notable international investors that have made anchor book investments in the company include New World Fund, Fidelity, Omnis Portfolio Investments, Nomura, Government Pension Fund Global, PGGM World Equity, Blackrock, Carmignac, Eastspring Investments, Citigroup, TOCU Europe, Integrated Core Strategies, CLSA, Matthews Asia Funds, and Societe Generale.
ICICI Prudential Mutual Fund, Kotak Mahindra AMC, SBI Mutual Fund, Axis Mutual Fund, Aditya Birla Sun Life Trustee, 360 ONE, Mirae Asset, Nippon Life India, Bandhan Mutual Fund, Invesco India, Motilal Oswal Mutual Fund, Sundaram MF, Tata MF, UTI Mutual Fund, DSP India Fund, Ashoka Whiteoak, Baroda PNB Paribas, Helios MF, and Avendus were among the domestic institutional investors that took part in the anchor book.
Various media reports cited that food delivery giant Swiggy intends to list at a valuation of $11.3 billion for its forthcoming IPO. Listing at a higher valuation of $15 billion or more was the previous goal. However, Swiggy has cut its IPO valuation target in order to increase the participation of individual investors and because of the current volatility in the Indian stock market.
The most recent private market valuation was $10.3 billion at the time Invesco invested. After November 6, 2024, the Swiggy IPO issue is scheduled to open for subscriptions. The book is anticipated to be anchored by about 30 foreign investors. However, the company has not yet released any official statement on these published media reports.
Swiggy’s Listed Competitors in the Midst of Volatile Markets
Zomato and Swiggy are rivals in India’s online restaurant and cafe meal delivery market. Both have placed significant wagers on the recent “quick commerce boom,” which promises 10-minute delivery of groceries and other goods.
Due to high valuations, ongoing withdrawals of foreign funds, and geopolitical issues, the Indian stock market is currently experiencing a downturn. A widespread selloff occurred when the local equity indexes, the Nifty 50 and Sensex, recorded their longest weekly losing streak in 14 months. Just a few days before Diwali and the start of Samvat 2081, indexes plunged into a bear market due to the atmosphere being further dampened by lacklustre corporate earnings.
The stock price of Zomato saw a significant correction in the present market conditions. Zomato’s stock price was INR 265.70 on the BSE on October 21. The new-age internet stock fell more than 5% over the week, plunging to INR 253.85 on the BSE in five consecutive trading sessions.
At INR 2,24,310.54 crore, Zomato’s market capitalisation is higher than Swiggy’s anticipated $11.3 valuation. With additional revenue sources from its B2B hyperpure business and Blinkit, Zomato’s food delivery service accounts for 46.17 percent of its total revenue. Its service portfolio has been further expanded with the recent acquisition of Paytm’s ticketing division.
The Specifics of Swiggy’s IPO
Supported by Prosus and SoftBank, Swiggy is anticipated to go public on the stock exchanges in November 2024. Beginning on October 30, the massive online meal delivery company intends to do roadshows for its stock offering in numerous Indian cities. According to the revised draft red herring prospectus-I (UDRHP-I), the proposed IPO entails the sale of 18.52 crore equity shares held by current shareholders through an offer-for-sale (OFS) and the issue of new equity shares valued at INR 3,750 crore.
Swiggy is contemplating a pre-IPO round to raise money, and if it is successful, the new issuance’s size will be modified appropriately. There are sections of the IPO dedicated to mutual funds, anchor investors, and qualified institutional buyers (QIBs). With a third of the allocation reserved for bids applying for between INR 2 and INR 10 lakh and the remaining portion for those applying for more than INR 10 lakh, non-institutional buyers will also have options.
According to reports, WeWork India, a joint venture between the American co-working giant WeWork and the Bengaluru-based real estate company Embassy Group, is considering preparations for an initial public offering (IPO). WeWork India is looking to go public with a target valuation of $2 billion to $2.5 billion. JM Financial has been designated as the book-running lead manager for the issue by the company, according to reports.
The IPO is expected to increase the valuation of WeWork India, which was valued at less than $400 million in its most recent investment round in 2020. According to the report, the company hopes to collect $350 million to $475 million through its first public offering.
WeWork’s IPO Offerings
Depending on the state of the market, the exact figures will be decided closer to the IPO date. Both a primary capital raise to assist corporate expansion and a secondary stake sale by current shareholders, including WeWork US, will be part of the offering.
The South Korean automaker Hyundai Motor Company, whose Indian unit is listed at a little discount after the nation’s largest IPO, had a disastrous Indian market debut. Now, WeWork’s intention to go public in the Indian stock market is a very interesting development for market observers to look forward to.
Plans to Launch the IPO in 2025
By year’s end, the corporation is supposed to submit the required paperwork. The Embassy Group is also hoping to shore up liquidity through the issuance; therefore, the firm is aiming for a listing by the first half of 2025. WeWork US came out of bankruptcy earlier this year with a $750 million equity valuation, and Anant Yardi, a digital entrepreneur of Indian descent, became the new majority owner. According to reports, the Embassy, supported by the Virwani family, attempted to purchase a 27% share in WeWork India from WeWork Global, but those plans were unsuccessful.
WeWork India sought to raise approximately $150 million from a group of investors, including Mithun Sacheti, the creator of CaratLane, the family office of Enam Group, and venture fund A91 Partners, in order to finance this transaction. The deal ultimately fell through, despite the company’s goal of a $550 million valuation.
About WeWork
With the goal of establishing spaces where individuals and businesses can collaborate and perform at their highest level, WeWork was established in 2010. Since establishing its initial office in New York City, the company has expanded to become a global provider of workplace solutions dedicated to offering adaptable solutions, motivating, secure environments, and unparalleled community experiences. Since that’s how the future operates, WeWork is always rethinking how the workplace can make everyone—from Fortune 500 companies to independent contractors—more driven, effective, and content.
One of the most significant long-term investments investors can make is in an initial public offering (IPO). Early on, investors can grow their cash by participating in the company’s growth. However, plenty of examples of companies that made a great first impression on the stock market but eventually bombed or underperformed once their shares were listed.
This is why, before putting money into a forthcoming initial public offering (IPO), it’s crucial to do thorough research on the company. After thorough research, investors will have all the data they need to make a well-informed decision. Now, let’s examine the steps an investor can take to evaluate an initial public offering. There is a long and lonely road ahead of a company that has decided to go public: the path to making an initial public offering (IPO). The regular time frame for an initial public offering is six to nine months.
The business and the investment bank collaborate on creating the prospectus and registration statement. This offer’s most crucial document, the red herring prospectus (RHP), is available to and can be used by retail investors. The document covers all company aspects except the amount of shares offered or the price. The red herring prospectus is an essential document for all enterprises.
The Companies Act states in Section 32:
A company proposing to make an offer of securities may issue a red herring prospectus prior to the issue of a prospectus.
A company proposing to issue a red herring prospectus under sub-section (1) shall file it with the Registrar at least three days prior to the opening of the subscription list and the offer.
A red herring prospectus shall carry the same obligations as are applicable to a prospectus and any variation between the red herring prospectus and a prospectus shall be highlighted as variations in the prospectus.
Upon the closing of the offer of securities under this section, the prospectus stating therein the total capital raised, whether by way of debt or share capital, and the closing price of the securities and any other details as are not included in the red herring prospectus shall be filed with the Registrar and the Securities and Exchange Board.
Issuers and underwriters promote the initial public offering (IPO) using the RHP. It is the most helpful resource for assessing the offer for a retail investor. Included in the paper are the company’s financials and other relevant details. This document also includes all the required disclosures outlined in the Companies Act and by SEBI. You will find definitions of all the main concerns and industry-specific terms here. Perhaps this section isn’t necessary for a thorough analysis of an offer from a sector with which you are already well-versed.
This one is crucial among the prospectus sections. This informs the investors about the intended use of the IPO funds. This is a surrogate for the company’s financial management and an indication of the future of the company. In this part, we describe the industry in which the business works and offer our predictions and forecasts for the future of that industry. This section will describe our business and go over our main activities. It lays forth the process by which the business makes money. This is very important to investors because it lays out exactly what they will get when they buy shares in the company.
Leadership
This section provides information about the company’s promoters, directors, and key management staff. The management team’s competence is a significant factor when investing in a new firm. Consequently, investors pay close attention to this part and try to learn as much about the company’s founders as possible.
Administrative and Miscellaneous Data
Every pending lawsuit that has been filed against the corporation, its promoters, or its directors is listed in this section. As a result, it provides investors with a more comprehensive perspective about the future and the primary emphasis of the company. In this portion, the investor is given the opportunity to put on his microscope glasses and examine each and every item that is discussed in this area.
Generating Interest
The initial public offering (IPO) should be a significant event for the company, similar to the summer blockbusters or Khan tentpole films. The initial public offering (IPO) roadshow is one strategy for getting the word out among investors. Once an initial public offering (IPO) is greenlit, the company’s investment bankers and underwriters go to work. To promote the IPO, they visit key financial centres across the globe. They are known as a “roadshow” since they travel from place to place.
Selecting between Fixed pricing issues andbook-building issues
Two distinct IPO procedures exist. Fixed pricing issues and book-building issues. In a fixed-price issuance, investors are informed of the price at which shares will be sold and allocated.
Alternatively, investors can bid on shares within a 20% range in a book-building offering. Only once bidding is closed is the ultimate price determined. An IPO price band may be as narrow as 20%. This price range is open to bids from both retail and institutional buyers. All investors have access to the book, a compilation of all the bids received for the initial public offering. That is to say, all present and future investors have access to the demand for the shares offered at different prices.
The IPO floor price serves as the minimum acceptable bid and sets the upper limit of the price range. The band’s upper limit, the IPO cap price, also prevents it from becoming higher.
Typically, the book is open for three days, during which time bidders have the opportunity to alter their first submissions. Because issuers can learn more about demand and pricing during the book-building process, they favour it over fixed price issues. So long as the market is prepared to give the value the issuer believes the issue is worth, the issue can proceed. The cut-off price is the final selling price of the issue. This is the maximum possible selling price for all the shares being offered.
The last step is to sell the issues on the primary market and collect the funds from the investors. Typically, there is a five-day workweek for the bidding process. The allotment of IPO shares is done within a 10-day window following the end of the bidding round. When an initial public offering (IPO) is oversubscribed, the shares are proportionally distributed among the applicants. Consider a scenario where the number of oversubscribed shares is four times the permitted amount. Then, out of 10 lakh shares, only 2.5 lakh will be allocated.
FAQ
What are investors most likely to look for in an IPO?
Investors look for strong financial performance, growth potential, and a capable management team in an IPO. They also consider market conditions and competitive advantages
How do you predict an IPO?
To predict an IPO, analysts evaluate the company’s financial health, industry trends, and market conditions. They also consider growth potential and investor sentiment.
What is the main indicator of successful IPO?
A successful IPO is marked by a significant rise in share price on its first day, indicating strong investor demand. Other signs include high trading volume and meeting post-IPO performance goals.
According to a media report, PhysicsWallah, the leading ed-tech unicorn, has picked four investment banks as advisors as it prepares for its 2025 IPO plans, following a capital round last month that valued it at $2.8 billion. PhysicsWallah has selected Axis Capital, Kotak Mahindra Capital, Goldman Sachs, and JP Morgan in response to the recent IPO proposals, the report added. It was unclear if additional banks would be added later on if necessary.
The proposed issue may aim to raise between $400 million and $500 million, while the exact amount has not yet been decided and the transaction size may change later. Additionally, based on the various investors’ lock-in periods and investment plans, the sale is probably going to be a combination of primary and secondary issues of shares, permitting growth funding and exit windows if necessary.
The Valuation Speculations
According to various reports, PhysicsWallah would aim for a substantial premium above the last round’s valuation of $2.8 billion. Industry rumours suggest a $4–5 billion target valuation; however, this has not been independently confirmed. Westbridge Capital, GSV Ventures, Lightspeed Venture Partners, and Hornbill Capital are among the investors in the company.
Physicswallah Could Become India’s First Ed Tech Firm to Debut on the Domestic Bourses
Given the uncertainties surrounding the previous listing aspirations of struggling peer Byju’s unit, Akash Education Services, PhysicsWallah may become India’s first educational technology company to make its debut on the domestic markets if these intentions eventually materialise into a listing. Indeed, competitors Vedantu and UpGrad have previously discussed their IPO intentions. Other companies in the market include Unacademy, Unext Learning, Allen Career Institute, K12 Techno, Brightchamps, and Simplilearn.
PhysicsWallah raised $210 million through main and secondary purchases on September 20. Along with current investors WestBridge Capital and GSV Ventures, Lightspeed Venture Partners participated in the capital raise, which was spearheaded by Hornbill Capital. Investor trust in the industry’s potential was demonstrated by the $2.8 billion valuation that PhysicsWallah was able to get, which was 2.5 times greater than the $1.1 billion it had previously received after its previous funding, despite difficulties in the Indian edtech sector. In its first fundraising round, the company raised $102 million from WestBridge and GSV Ventures.
Exploring the world of finance
In 2014, the Noida-based business began as a YouTube channel. It has more than 112 YouTube channels in five Indian languages, with almost 46 million subscribers. The company employs over 14,000 people, has 5.5 million paid students, and uses technology-enabled offline and hybrid centres to operate in 105 Indian cities.
The company’s highest absolute EBITDA year is anticipated to be FY25. The firm’s offline centres, which have required a large financial investment, will also begin to produce results over time, even though its online activities have been almost 50% profitable since day one. Its revenue increased 2.5 times in FY24. For FY24, the company had anticipated INR 2,400 crore in revenue.
Brainbees Solutions, the parent company of omnichannel retailer FirstCry, has submitted its draft red herring prospectus (DRHP) with plans to raise ₹1,816 crore through the issuance of fresh shares and an offer for sale of more than 54 million shares. The Pune-based company intends to utilize the raised capital for establishing new stores and warehouses, as well as facilitating international expansion. Despite being valued at under $3 billion in the private market, the company is anticipated to launch its public issue at a valuation of approximately $4 billion.
Notably, existing investors such as SoftBank Vision Fund led by Masayoshi Son, Premji Invest, Mahindra Retail, and TPG Growth, among others, will divest a portion of their shares in FirstCry. In addition, all four co-founders of FirstCry will also sell part of their stakes to new investors through the offer for sale, with the proceeds not contributing to the company’s funds.
Ratan Tata is set to sell nearly 78,000 shares, while SoftBank plans to sell 2 crore shares, Mahindra Retail 28 lakh shares, and Premji Invest will offload 86 lakh shares, as revealed in the filings. Currently, SoftBank and Premji Invest hold 25.5% and 10.36% of FirstCry, respectively, with SoftBank being the sole investor possessing more than a 15% stake in the company.
CEO Supam Maheshwari has also diluted his holding, reducing from about 8.15% a year ago to 6%. The remaining co-founders – Sanket Hattimattur, Amitava Saha, and Prashant Jadhav – own 0.58%, 2%, and 1.44% of the startup, respectively.
Additional selling stakeholders encompass PI Opportunities Fund, NewQuest Asia, Apricot Investments, Valiant Mauritius Partners, TIMF Holdings, Think India Opportunities Master Fund, and Schroders Capital Private Equity Asia. The funds generated from these transactions are earmarked for several purposes, including the establishment of new contemporary stores and warehouses in both India and Saudi Arabia. Furthermore, the funds will be allocated for lease payments related to existing stores, acquiring a supplementary stake in indirect subsidiaries affiliated with GlobalBees Brands, financing marketing and technology expenses, and supporting inorganic growth initiatives.
FirstCry has indicated the possibility of exploring a private placement of equity shares for specific investors, with a potential infusion of up to Rs 363 crore, as outlined in the filing. If the pre-IPO placement materializes, the funds raised will be subtracted from the fresh issue, with the total amount not exceeding 20% of the overall size of the fresh issue.
The company boasts in-house brands such as BabyHug, CuteWalk, Pine Kids, and Babyoye. Its comprehensive omnichannel approach encompasses 80 warehouses and stockists spread across 47 cities in India, boasting a cumulative capacity of 3.07 million sq ft to support 936 modern stores. Among these, 615 stores operate under franchise ownership, while 321 are directly owned and operated by the company.
For the efficient execution of its expansion strategy, FirstCry plans to allocate Rs 357.2 crore from the net proceeds. These funds will specifically be channeled into capital expenditures for fit-outs, inventory costs, and security deposits, facilitating the establishment of 483 new stores in India by the fiscal year 2026-27.
The book-running lead managers for the IPO are Kotak, Morgan Stanley, Bofa Securities, JM Financial, and Avendus, with Link Intime India Private Limited serving as the registrar of the offer.
Although the specific dates for FirstCry’s IPO subscription have not been disclosed in its DRHP, various media reports suggest that the public issue is anticipated to open in early 2024. Details such as the offer price and IPO price band are yet to be announced.
Established in 2010 by Maheshwari and Amitava Saha, the company initially commenced operations as an online baby care brand but swiftly transitioned to an omnichannel strategy, mirroring the approach of many direct-to-consumer entities. Despite experiencing consistent revenue growth, FirstCry encountered ongoing losses over the years. In the past decade, the company managed to achieve brief profitability in FY21, attaining a profit of Rs 216 crore.
FirstCry Financials
However, the financials for FY23 reveal a substantial six-fold increase in losses, reaching Rs 486 crore for the year. This escalation in losses occurred despite a twofold surge in sales, with the company reporting revenue from operations amounting to Rs 5,632 crore during FY23, more than double the Rs 2,401 crore recorded in the preceding year.
The expenses for the year exhibited a notable 146% increase, rising from Rs 2,568 crore in FY22 to Rs 6,316 crore in FY23. Virtually every cost component experienced a significant uptick for the company during this period.
According to the DRHP, FirstCry primarily contends with organized entities in the Indian Childcare Products market. This includes horizontal online platforms like Amazon, Flipkart, and Meesho, as well as vertical online platforms such as Hopscotch, Myntra, and Ajio. Additionally, it competes with multi-brand and exclusive retailers like Reliance Trends and Gini & Jony. Notably, there are no significant organized specialty vertical multi-channel players in India’s Childcare Products market.
A RedSeer Report indicates that India boasts the largest population of children globally, with approximately 309 million children under 12 years of age as of July 1, 2022, and a birth rate of 16.4 births per thousand people in the calendar year 2021. Despite the current nascent spending per capita on childcare products in India at ₹7,975 in the calendar year 2022, it is projected to grow rapidly, with an estimated CAGR of around 15% from 2022 to 2027. This growth rate surpasses that of mature markets, such as the USA (3%) and China (7%), as outlined in the DRHP.
FirstCry acknowledges potential risks in its future endeavors, highlighting concerns about expenses related to marketing, expansion, retail distribution, and stock options that could adversely affect its financial condition.
The DRHP explicitly states, We cannot assure you that we will continue to grow our customer base at this rate or at all in the future. Further, if we fail to acquire new customers, or fail to do so in a cost-effective manner, we may not be able to maintain or increase our revenues or grow our operations.
Reliance Retail Ventures Ltd (RRVL), under the leadership of Mukesh Ambani, is gearing up for a monumental Rs 8.38 lakh crore IPO scheduled for 2025. As this colossal IPO looms on the horizon, the remarkable journey and strategic maneuvers of Reliance Retail have become a focal point for investors and market observers.
RRVL is in discussions regarding a comprehensive strategy that involves an additional divestment ranging between $250-300 million this year. This comes in addition to the recent dilution in favor of the Qatar Investment Authority (QIA) and the US-based private equity fund Kohlberg Kravis Roberts (KKR). According to sources familiar with the discussions, this will be succeeded by a third stake sale offer to investors next year, at an increased valuation, preceding an anticipated initial public offering (IPO) in 2025.
In August of this year, RRVL divested 0.99% in favor of the Qatar Investment Authority, amounting to $0.99 billion (Rs 8,278 crore), resulting in a nearly doubled company valuation from Rs 4.21 trillion to Rs 8.27 trillion post-deal. Additionally, RRVL secured a deal with KKR, wherein the existing investor invested an additional Rs 2,069.50 crore, increasing its stake from 1.17% to 1.42%.
In a headline-making move, the Qatar Investment Authority (QIA) acquired a 1% stake in Reliance Retail for an astounding Rs 8,278 crore. This substantial investment is expected to significantly enhance the growth potential of Reliance Retail. The QIA, established in 2005, serves as the sovereign wealth fund of the State of Qatar, managing surplus funds from the country’s substantial oil and gas reserves. With a diversified portfolio spanning various sectors, QIA is a key player in global investments.
Kohlberg Kravis Roberts (KKR)
Kohlberg Kravis Roberts (KKR) further demonstrated its commitment to Reliance Retail by increasing its stake from 1.17% to 1.42%, injecting an additional Rs 2,070 crore. KKR, a globally renowned investment firm founded in 1976, is recognized for its expertise in private equity and alternative asset management across diverse sectors such as technology, healthcare, energy, and retail.
Abu Dhabi Investment Authority (ADIA) secured a 0.6% stake in Reliance Retail through an investment of Rs 4,966 crore, signaling its interest in the Indian retail sector and expressing confidence in Reliance Retail’s strategic positioning. Established in 1976, the Abu Dhabi Investment Authority is a formidable sovereign wealth fund owned by the Emirate of Abu Dhabi in the United Arab Emirates. Known for its extensive and diversified global investments, ADIA holds stakes in various asset classes.
According to analysts at Motilal Oswal, Reliance Retail Ventures Limited (RRVL) is anticipated to experience substantial growth. We project an annual increase of approximately 25% in earnings and 34% in profits, resulting in total revenue reaching around INR 4.1 trillion and profits reaching around INR 320 billion by the year 2025.
An insider familiar with the developments stated, “Reliance Retail has extended participation offers to all their key investors in this round as well. The ongoing discussion pertains to further divestment in 2024, at an elevated valuation before gearing up for an IPO.” Sources indicated that considering upcoming elections in India and the US next year, the prevailing sentiment is to abstain from major financial moves in 2024 and instead pursue an IPO in the subsequent year.
RRVL also counts other global investors among its stakeholders, including sovereign funds such as Saudi Arabia’s Public Investment Fund, Mubadala, and GIC Singapore, along with TPG, Silverlake, and General Atlantic. These investors, who injected funds in 2020, have witnessed a substantial increase in valuations in 2023.
The funds divested in Reliance Retail constitute 11.31% of the stake, attracting investments amounting to Rs 57,562 crore. In FY23, Reliance Retail reported annual revenues exceeding Rs 2.6 trillion, marking a 30% increase, and generated profits of Rs 9,181 crore. The company currently holds a position among the top 10 retailers globally and ranks within the top four in the country.
Reliance Retail Revenue for FY 2022 and FY 2023
With a footfall of 780 million in FY23 and a customer base nearing 250 million, Reliance Retail reaches 30% of the addressable population in the country. Consequently, it stands among the 10 most visited retailers worldwide. While digital and new commerce businesses contributed Rs 50,000 crore to revenues in FY23, constituting a fifth of total sales, the company has invested over $10 billion in the last two years for expansive growth. This is evident in the opening of 55 stores in the first quarter of FY24, bringing the total store count to 18,446, spanning 70.6 million square feet.
Noteworthy Financial Performance
The formidable financial performance of Reliance Retail becomes evident when examining the first quarter results of the fiscal year 2024. During this period, the company disclosed an impressive revenue of Rs 62,159 crore, coupled with a net profit of Rs 2,448 crore. These figures underscore Reliance Retail’s remarkable growth trajectory and profitability, solidifying its position among the top 10 retailers worldwide and ranking within the top four companies in India in terms of equity value.
“I have the conviction that as India progresses from a $2500 per-capita economy to a $10,000 per capita economy, Reliance Retail will emerge as our swiftest-growing business in terms of revenues and EBITDA,” affirmed Mukesh Ambani, the chairman of Reliance Industries Limited (RIL), during the company’s 46th annual general meeting (AGM) held in August.
In addition to its flagship Reliance Retail, RRVL boasts other subsidiaries and joint ventures, including Reliance Brands and Marks & Spencer, overseeing the remaining facets of apparel and additional retail operations.
Funding is the act of providing resources to finance a need, program or project. Sources of funding include credit, venture capital, donations, grants, savings, subsidies and taxes. There are two types of funding:
Soft Funding This type of funding includes donations, subsidies and grants that have no direct requirement for return of investment. It is also known as crowdfunding.
Equity Crowdfunding Funding that facilitates the exchange of equity ownership in a company for capital investment via an online funding portal per the Startups Act, is known as Equity Crowdfunding.
Funds can be allocated for either short-term or long-term purposes.
Value of Startup Funding Across India from 2015 to 2021
Businesses regularly seek funding. This funding can be for one of these three reasons:
For Research
This is most often allotted in the fields of technology or social sciences. This type of funding is granted on the basis of a project, a department or an institute depending on the scope of the research or the project. Organisations that require such funding normally have to go through competitive selections.
For Launching a Business or Startup
Entrepreneurs with a business concept need the necessary resources including capital to venture into the market. The size of the funding required by these businesses depends upon the nature of the business.
For Investments
This type of funding usually involves fund management companies that gather pools of money from various investors and use it to purchase securities. These funds generate returns through asset diversification. The main purpose of these funding activities is to pursue individual or organisational profits.
Stages of Startup Funding
Stages of Startup Funding
A new business demands much more than a great idea. It needs dedication, discipline, hard work and most importantly funding to convert its great idea into a successful reality. As the business progresses and grows, it may require funding for expansions and research depending on the type of business. There are different stages of funding that respond to different needs at different stages of a growing business.
Pre-Seed Funding
This is the ideation stage. It is a time when the entrepreneur is working to bring the idea to life. That is why it is known as the pre-seed stage. Usually, the fund requirement at this stage is small and there are very limited and mostly informal channels available for raising money.
One way to raise capital is to self-finance. This can be accomplished by relying on personal savings or by mortgaging or selling real estate property for money.
The more common method is to borrow from friends or family members. The biggest benefit of this method is that there is an inherent level of trust between the entrepreneur and the investors.
Another method is to win the prize money/grants/financial benefits that are provided by institutes or organisations that conduct business plan competitions. Though not large, the amount of money is usually enough for the ideation stage. The challenge is that the business plan has to be approved by the judges.
Seed Funding
Seed capital is the investment made at the preliminary stage of the startup. This money helps the business in identifying and creating its roadmap and the direction in which the business needs to grow. To this end, the money goes towards identifying the market demands, preferences and tastes and then formulating a product or service. Seed funding is generally raised from
Bank or even Non-Banking Financial companies (NBFCs) in the form of loans.
Mentors, friends or family members.
Crowdfunding
Angel Investors
Venture Capital Funding
This form of private equity financing is provided by venture capital firms for funds to startups and emerging companies that are deemed to have high growth potential and have demonstrated strong business operation acumen. Venture capital comes into the picture when the company’s products or services reach the market. This is a growth stage that further involves more rounds of funding.
Series A Funding
This is the very first round of VC funding that is primarily used for marketing, improving brand credibility, tapping new markets and business growth. The potential investors for Series A funding are-
Accelerators
Super Angel Investors
Venture Capitalists
Series B Funding
When a business reaches the stage of Series B funding, it means that the product has found a market and there is scope for growth in other markets as well. This type of VC funding is utilized to hire more staff, improve the infrastructure and expand the business beyond local borders. Potential investors for this type of funding are-
Venture Capitalists
Late-stage Venture Capitalists
Series C Funding
While there is no limit to the rounds of funding that a business can receive this round of business funding entails great caution. The more investment rounds, the more the business releases equity. The potential investors for series C funding are-
Late Stage Venture Capitalists
Private Equity Firms,
Hedge Funds
Banks
Series D Funding
This is a funding stage that is not very common for businesses. This type of funding allows entrepreneurs to raise money for special situations like a merger or if the company hasn’t hit its growth goal yet. The potential investors in this funding are the same as the investors in the Series C Funding.
Number of IPOs in Public Markets of India from 2015 to 2021
Initial Public Offering is the process of offering corporate shares to the general public for the first time. Growing startup businesses often use this process to generate funds for expansion and growth. There is a specific process for growing startups who decide to raise capital via the IPO route.
The business has to form an external public offering team comprising of underwriters, lawyers, certified public accountants and SEC experts.
Information regarding the company’s financial performance and its expected future operations has to be compiled.
An audit has to be conducted of the company’s financial statements that generates an opinion about its public offering.
The company, then, has to file its prospectus with the SEBI and determine a specific date for going public.
An IPO has several other benefits to offer other than raising funds for a growing business. These are:
Additional funds can be generated through secondary offerings as the company already has access to public markets.
Executives of the company can be partly compensated through stocks.
Mergers are easier for public organisations.
Apart from all the known funding methods, there are some lesser-known but quick methods to raise money for a startup. These methods may not work for everyone but depend on the type of business operations. These are:
Product Pre-sale: Companies like Apple and Samsung raised finance to continue operations by starting a pre-order campaign well ahead of the official product launch. It is an often overlooked and highly effective method to raise capital and improve cash flow.
Selling Assets: This is a tough step to take but it is effective to meet short-term fund requirements. These assets can be bought back once the business is out of a crisis.
Credit Cards: This is not the most effective way nor is it highly recommended. However, it is one of the most readily available ways to finance a business. The credit can be continued by making minimum payments, but, the interest rates and the costs on the cards can build very quickly. Carrying that debt can be detrimental to the business owner’s credit in the long run.
Conclusion
The various startup funding stages allow entrepreneurs to scale up their business operations at any stage of their business. This practice also allows them to identify the stage at which their company is operating and which potential investors might fund them for expansion.
Also, this is a cyclic event as many startups that have grown successfully through funding might become investors in other startups as well.
FAQs
What are the stages of funding?
The stages of startup funding are:
Pre-Seed Funding Stage
Seed Funding Stage
Venture Capital Funding Stage (Series A, B, C, and D)
Initial Public Offering (IPO)
What is the pre-seed funding stage?
It is a time when the entrepreneur is working to bring the idea to life. It is the stage of ideation which is why it is known as the pre-seed stage. The most common source of funding at this stage includes self-finance, family and friends, or grants from certain institutions.
What is considered late-stage funding?
Late-stage funding is meant for companies that have passed the phase of ideation, and product development, and are making sales. Late-stage funding is gained by companies that are growing and shows huge growth potential to investors.
Most companies focus on IPO (Initial Public Offering) only after they have attained unicorn status. But, is it actually the criteria for it? After all, this is one of the best measures to generate funds for your company.
In this blog, we will discuss the various aspects of IPO and how you can determine whether your company is ready for IPO status.
Initial Public Offering or IPO is the process through which a private corporation offers its shares to the public for the first time, in new stock issuance. It is also a measure for the company to raise capital from public investors.
It is one of the ways for private investors to fully realize their investments. Sometimes it also works as an exit strategy for the earlier investors or founders by fully realizing their gains. It provides the opportunity for the company to obtain capital through their primary market by offering its shares.
Usually, the companies hire investment banks to help with the market demand and set the price for IPO.
How IPO works?
Total Value of IPOs in Public Markets of India from 2015 to 2021
A company before IPO is considered a private firm. It only comprises of a few shareholders including the founders, cofounders, or professional investors like angel investors or venture capitalists.
IPO does not just allow the company to gather capital but, it also provides an opportunity to expand and grow faster. As stated earlier, typically the companies that have acquired unicorn status i.e., have reached the valuation of 1 billion, advertise their interest in going public.
However, private companies that have proven their calibre for profitability and have well-built fundamentals can also qualify for an IPO. A company should reach the maturity stage where it is able to stand up to the rules and regulations of the Securities and Exchange Commission (SEC).
Also, it should be able to take care of the benefits of the shareholders and its responsibility towards them. Overall the market competition and the company’s ability to deal with the list of requirements make it eligible for starting the IPO process.
When a company decides to go public, its previously private shares are converted into public shares. The worth of the shares already existing with the previous private shareholders becomes equal to the public trading price.
Now, every individual who is interested in investing in the company has the opportunity to contribute towards the company’s shareholders’ equity. Therefore, the new value of the company’s shareholders’ equity depends upon the number and price of shares it sells.
The IPO process is divided into two parts, the premarketing phase and the actual initial public offering. A company first advertises to underwriters, these are the individuals responsible for evaluating and assuming the company’s risk for payment.
These underwriters are requested for private bids after which the company chooses one or more of them to lead their IPO process. There can be several underwriters responsible for managing different parts of the process viz. filing, marketing, document preparation, etc.
The various steps included in the IPO process are as follows:
Proposals
After the company’s advertisement, underwriters submit their proposals describing their services, offering prices, share amount, as well as the time duration for the market offering.
Underwriter selection
The Company goes through the proposals and then chooses the underwriter and an underwriting agreement with terms is prepared.
Team formation
A team comprising of underwriters, lawyers, SEC experts, and Certified Public Accountants (CPA) is formed to lead the process.
Documentation
The primary document for IPO filing is the S-1 Registration Statement which is divided into two parts viz. the prospectus and the privately held filing information. This document also includes information regarding the expected filing date. It undergoes multiple revisions throughout the pre-IPO process.
Marketing & Updates
New stock of issuance is pre-marketed by the underwriters and executives to estimate the market demand for deciding the final offering price of the shares. Throughout the marketing process, underwriters revise the financial analysis based on market response. This might also include changing the issuance date or even the price of the IPO. The SEC as well as exchange listing requirements are well taken care of by the companies.
Board & Processes
A Board of Directors is formed to look after the financial and accounting information as per the audit requirements for quarterly reporting.
Issuance of Shares
The Company issues the shares on the pre-decided date. The primary shareholder issuance is received as cash and is recorded in the balance sheet as stakeholder’s equity.
Post-IPO
There are certain post-IPO provisions. The underwriters also have the opportunity to buy additional shares within a specified time duration.
The key objective of an IPO is to raise additional capital for a company. It also benefits the company through increased prestige and exposure amongst the public which may boost sales and profits. Moreover, IPO can help a company lower the cost of capital for both equity and debt.
Every year several companies start their journey as an IPO. India saw an IPO boom in 2021 with around 125 companies making their debut in the market.
Although the highest number of IPOs were registered in 2017 reaching a mark of 172, the capital raised was highest in 2021. These 125 companies raised around 18 billion USD in comparison to 10 billion USD by 170 companies in 2017.
Other than earning handsome returns, the companies listed in the IPO have also experienced strong gains in listings as well as an increased number of subscribers. Zomato and Tatva Chintan Pharma are an example of this.
But, what does it take for a company to be IPO-ready? In this section, we will discuss the factors that differentiate an IPO company from others.
The process to become IPO-ready is long and tedious. It isn’t so that a company thinks of it and makes an announcement the next day. A number of things have to be managed.
The process of getting IPO ready begins at least 12˗18 months before the actual announcement. Some of the major factors looked after during this time frame include:
Influential Board of Directors
When you are thinking of bringing your company to the public for funding, having a board comprised of members well recognized for their potential and decisions is always a good idea.
This plays a significant role in establishing your firm as a reputed and confident organization. This is why most companies focusing on getting IPO-ready look for admired experts from different sectors.
There are a number of examples in the market to prove this fact. For example, ixigo is an AI-based travel portal. Just sometime before the company filed for IPO they hired former IRCTC Chairman, Mahendra Pratap Mall as one of the board members.
Similarly, former HDFC MD, Aditya Puri joined API holdings, PharmEasy’s parent company, before their announcement of being an IPO contender.
Restructuring the Business
Internalrestructuring mightbe required by some businessesto put theirbest arm to work. However, just like the board, these decisions must also be taken well in advance before the IPO process begins.
For example, in Nuvoco Vistas, the cement arm of Nirma group, internal restructuring was undertaken before IPO. As a part of it, the Rajasthan cement unit was brought under the hold of the firm. The company had a 5000 crore IPO.
Physical or Digital
The experts claim that the coming time would make it mandatory for Indian businesses to work in both physical and digital ways. Taking this into caution, many deals are being made, where a digital business acquired a physical one and vice versa.
These deals are majorly done for scaling up, by filling in the gaps in the portfolio and strengthening different verticals of the company.
For example, Pharmeasy, an online pharmacy startup acquired a 66.1% stake in diagnostics chain thyrocare technologies, for Rs 4,546 crore, to diversify its business.
Experts believe that more such omnichannel transactions will follow in the coming time and such deals will soon become a part of pre-IPO requirements.
Executive Support
Another important but often ignored aspect of IPO is finance function. While most businesses focus on a board full of influential directors there is the least attention paid to the finance division.
The fact is that during the entire IPO process the company face a number of stumbling blocks. That is why they need a team who can back them up during their stresses.
Considering an experienced Chief Finance Officer (CFO) for the company is a great step to include in the IPO process. After going public, the CFO has to face challenges such as greater reporting, governance, regulatory, and audit standards.
Although not seen everywhere but the food delivery company Zomato, opted for a new CFO well before its IPO process. They promoted their Corporate Development Head, Akshant Goyal, to the position of CFO.
Businesses should also look for experienced individuals for the posts such as executives, company secretaries, etc.
Financial Transparency
Irrespective of business size or model, financial transparency forms an essential aspect of the IPO process. This is also a part of the equity strategy of the IPO-bound company.
Generally, financial statements for the past 3 years before the IPO announcement are considered optimum. Yet, experts believe that preparing financial statements and subjecting them to review by the board must begin well in advance.
In many cases, the lack of quality financial statements becomes the reason for missing the IPO timelines while other such reasons maybe not be SEBI ready.
For a startup or any business going public means more responsibility, financial discipline, planning as well as its execution.
There is a tough road ahead so before you finally decide to have IPO, the following checklist must be marked:
Growth
Investors will only be interested in spending their money on a healthy and thriving business. With growth, here we mean revenues. Growing revenue is an indicator that the company has more new customers, or old customers buying more products and that the customer churn rate is low.
Experts believe that revenue growth of 30% for the last two years will ensure that the company will be able to stand against its competitors in the market.
Capital
Although gathering resilient capital is the main reason for any business to opt for IPO but going public at a time when the business really needs capital can be the worst decision.
There should be enough cash in your balance sheet not just to attract investors but also to make you appear trustworthy. Just like you, investors are also here for the money. They want to see that soon their investment will be able to provide them with good returns.
Market Size
Large market size is an indicator of opportunity and potential. This means the company is able to expand without much hassle.
Although calculating the exact market size can be tricky, it is traditionally done by gauging the revenues of the legacy players. Also, factors like high growth, scaling up, etc., are indicators of good market size.
Competitors
Direct or indirect, having a track of competitors is important. The investors would only want to spend their money on a winning bet. The overall IPO opportunity as well as the total addressable market depends upon the competitors.
A more crowded market tends to receive a lower valuation. Unless there is a clear differentiation between the company under question and other competitors in the market, it is difficult to bag the deal.
A systematic, dominant company with an already large market is preferred by public investors.
This refers to the analysis per product revenue and cost. This helps in isolating the core cost of the business and helps gauge how the business would perform at maturity. It also analyses the long-term margins.
Leadership
Good leadership inspires the trust of investors. The CEO and CFO are the faces of the company. The reputed and recognized faces help attract public attention as well as investment.
So before thinking about IPO, think about the board of directors, executives, and finance in charge of your company.
Legal Compliance
The company should be a law-abiding entity and must have all the required licenses and other necessary formalities completed as per law. Not having any legal issues pending strengthens the trust of the investors.
Therefore, it is also essential to get rid of any vetting issues. Any vetting issues must be managed with utmost concern before the company is listed for IPO
It is always good to have a legal team to guide you through the process. They may also be helpful in the preparation of documentation submitted during the time of IPO processing, ensuring that they are as per the rules and regulations of the Security and Exchange Commission. Moreover, the company should be apt with the tax payment and other legal responsibilities.
Conclusion
We have shared with you an extensive checklist while trying to cover major aspects of the IPO process and the necessary details that must be taken care of before deciding to go for it. Still, the IPO process is complex and always requires expert advice.
It is essential to go through every detail carefully while making the final decision. The legal, as well as financial issues, must be handled as a priority without ignoring the other related functions.
FAQs
What are the benefits of buying an IPO?
There are several benefits of buying shares in an IPO such as:
High growth potential
High chance of big returns in the long term
More price-related transparency
Shareholder ownership authority
Small investments may provide great profit
How can I buy shares in an IPO?
Buying shares in an IPO is a complicated task. This is the common procedure for buying shares in an IPO:
Choose the right IPO
You must have a Demat account/trading account and PAN card with a broker that offers IPO access
Arrangement of Funds
Bidding of Shares
Get an allotment of shares
How can I find the best IPO?
To find the best IPO you need to do the following things:
Infosys is one of the global leaders with its presence in over 50 countries and around 130 development centers in the world. There are over 3,14,000 employees in the organization with over 200 offices spread across the globe. It is also a globally certified, top employer. Headquartered in Bengaluru, the IT Services and consulting company has become the 2nd most valuable Indian brand. The company manages thousands of projects with excellence. Let us get insights into how Infosys sources its skill power to several locations around the globe and manages its project to create value for its clients.
The founder of Infosys is N.R. Narayana Murthy. He started the company in 1981 with only 10,000 rupees in his hand, borrowed from his family and six of his co-workers from his previous workplace.
The company managed without having a computer booth for two years.
It took them the same two years to get the computer that Mr. Murthy wanted.
The company could not afford to import data initially.
One might assume that being one of the company’s founders, the first employee at Infosys was Mr. Narayan Murthy. However, it was not Mr. Murthy but N. S. Raghavan who was the first employee.
The company was on the brink of collapsing after eight years. When one of their founders, Mr. Ashok Arora, left the company in 1989 and handed over the responsibilities to Mr. Murthy.
Milestones Achieved by Infosys
Infosys has achieved many heights till now, some of which are:
Infosys became the first Indian I.T. company to get listed on NASDAQ (National Association of Securities Dealers Automated Quotations)
While the world was still trying to overcome the biggest financial scam of 1992, Infosys finally became public in 1993. Its IPO was 13% subscribed.
It has received the 2021 Frost and Sullivan Strategy Leadership Award.
It was made public in the year 1993, opening the first Iraq-based sales, and won contracts for developing mission-critical software for very high-profile companies like Nordstrom and Nortel; from 1990 to 2001, revenue grew at over 80% per year.
In 1999, Infosys hired its 300th employee and became the first Indian-registered company listed on the Nasdaq. Its revenue that year reached 100 million US dollars.
The company now has its presence in over 50 countries, with over four decades of experience in managing the systems and workings of global enterprises.
Infosys has an arsenal of 260k+ employees and 1,659 trusted clients.
Infosys Business Model
A business model is a company’s core strategy for profitably doing business. It includes information like products or services the business plans to sell, its target markets, and any expected expenses. Since its inception, Infosys has been the face of the Indian IT sector. Its business model caters to two categories: IT Consulting and IT Services.
In its initial years, Infosys focused primarily on international markets, such as the US and UK. The Global Delivery Model (GDM) was its primary business model. During the 1990s, Infosys concentrated on a few sectors, such as banking and finance, and manufacturing. Infosys’ exponential growth is because they charge a lower premium than companies like Accenture and IBM.
Consistent growth is very necessary for any business to maintain its existence. By increasing its per capita revenue, visibility in the business, client portfolio, and changing its investment strategies, Infosys has maintained a consistent growth record.
Infosys Partnership Strategy
Infosys created a unique system that transforms its clients into partners. Their long-term success has been greatly enhanced by this partnership strategy. The investments made by these partners have allowed them to make significant profits.
Infosys Global Presence
The company has built a network of branches across the globe, which allows its services to be provided in many countries. They have branches in the United States, India, Europe, China, Australia, Japan, and the Middle East. The company has 116 development centers, 84 sales and marketing offices, and 18 international offices.
Infosys’ revenue generation model is considered one of the top development systems in the IT industry. Among its revenue-generating activities are:
Enhancing Process – The incorporation of cutting-edge technologies and gathering data from external sources helps them save time and improve their efficiency against their competitors.
Increasing Profit Margin – Outsourcing their work to offshore branches allows them to increase their profit margins.
Increasing Reuse – With years of experience, expertise in management systems, and their Knowledge Currency Units, Infosys has an advantage over its competitors.
Small Steps to Giant Leaps – A Center of Excellence in every business unit has enabled them to fund projects on broader scales.
Global Delivery Model – Infosys generates approximately two-thirds of its revenues from the North American market thanks to its strategic IT services and professional consulting.
Conclusion
Infosys has become one of the top companies in the I.T. industry. The key takeaways from the company’s success story are:
As a result of the inspiration of the founders, it is one of the most respected companies in the world.
Setbacks happen, but that does not mean you do not take risks and embrace change.
Keep yourself updated with cutting-edge technology to get an advantage over your competitors.
Having a global presence can help you reach more clients.
Have a strategy that works the best for you.
The strategy to expand its services in different corners of the world, the acquisition opportunities, creating trust and value for its clients, and a proper profitable business model made the Company grow so huge. Infosys has amplified the potential and opportunities for people and businesses. It is among the most valued Indian companies leading the IT Service industry globally for years.
FAQs
When was Infosys founded?
Infosys was founded in 1981 in Pune.
Who is the founder of Infosys?
N.R. Narayana Murthy is the founder of Infosys.
Who is the CEO of Infosys?
Salil Parekh is the CEO of Infosys since 2018.
What is the revenue of Infosys?
The global revenue of Infosys Limited amounted to about $13.56 billion in FY2021.
Nitin Konde
