Startup IPO Talk: IPO-eying unicorn startups discuss tech with India’s leading mutual funds

More than a dozen domestic institutional investors (DII), including similar Mutual fund HDFCAxis Mutual Fund, Mirae, with $250 billion under management, with founding and management teams of Indian unicorns Swiggy, Meesho, Unacademy, Lenskart and Acko, among others, all of whom are considering a possible stock market listing in the next two years. years.

A two-day meeting held in Bangalore and hosted by the Japanese SoftBank as well as JP Morgan, was aimed at helping the domestic public investor community understand some technology companies and their future. The meeting is significant as it comes at a time when the global technology industry is undergoing a major correction in both private and public market valuations.

“DIIs are a vital component of the Indian stock market and they will become more important over time… As more technology companies go public and become a larger part of the indexes, it is important for these two components to build relationships and better understand each other.” friend,” said Sumer Junja, Managing Partner and Head of India, SoftBank Investment Advisors.

Last year, eight Indian startups were listed on public markets, including the likes of PolicyBazaar and seven of them on domestic exchanges.

However, DII is ambivalent about these tech company lists. For example, during
Zomato listing in July 2021, nearly 19 domestic mutual funds participated in their anchor book through 74 schemes. Among them are such big names as Kotak MF, ICICI Prudential,

MF and Aditya Birla Sun Life Insurance, among others.

During the listing of parent company Paytm One97 Communications In November,
only four local asset management companies participated in the anchor book.

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According to people who attended the closed-door meeting, DII remains cautious about supporting startups.

“There is a sense of caution that DIIs may have towards high-growth companies as they look for predictability in business models and results…However, they understand the long-term trend of investing in technology stocks that have the potential to create value compared to the next 10-15 years,” said one of those present at the meeting.

A prime example of this is participation in the Nykaa Anchor Book, where out of the total shares allocated to anchor investors, 70,98,801 shares or 33.33% of the total were distributed to 21 local mutual funds through 93 schemes.

Unlike the venture capital community, which encourages turnarounds and rapid growth for a startup, DII is focused on the stability of even some of the companies listed last year, said another person who met with asset managers.

The meeting comes at a time when shares of Indian technology companies listed last year, such as Zomato and Paytm, have plummeted. Shares of the listed digital startups also tumbled globally, tracking inflationary pressures and rising interest rates.

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