Second Wave of IPOs Turning into a Gold Rush for Investors

A second wave of initial public offerings (IPOOs) of venture backed new age firms, starting with Mamaearth parent Honass Consumer last October and followed by Go Digit, Awfis and ixigo this year, is turning into a gold rush for investors such as Peak XV Partners, Elevation Capital, Chrys Capital, A91 Partners and TVS Capital.

The first such set of companies, which went public in 2021 and 2022, include Zomato, Nykaa, PB Fintech, Paytm and Delhivery SoftBank, Info Edge and Elevation Capital were among investors who sold stakes at the time. In the case of online travel tech platform ixigo, venture investors such as Elevation Capital and Peak XV are looking at returns of at least 13 times and eight times, respectively on their investments, according to ixlgo’s IPO documents.

Elevation Capital, a backer of publicly-listed startups like Paytm, Justdial and Indiamart, had invested crore in ixigo in several tranches Similarly Pesk XV had invested a total of ₹67 crore in Ixigo. The two VC firms partially sold their stalkes in a pre-IPO secondary sale.

At coworking startup Awfis, Peak XV and Chrys Capital pared their holdings through the IPO in May and as per the company’s latest stock price, are sitting on returns of at least 3.2 times and 2.7 times, respectively including proceeds from the public issue.

 Peak XV had invested a total of about ₹194 crore in Awfis while Chrys Capital, through its various entities, invested shout about ₹249 crore, as per the company’s draft prospectus.

“Exits have taken a front seat for VC firms. That is evident from the rising number of large secondary transactions too. The buoyancy of the public markets seen over the last one year was a train not to be missed some of are quite old investments for these VCs and were primed to go public, a New Delhi-based investor said.

“Compared to the previous wave of IPOs where the companies were much larger too this time the size the issues has also been relatively small. This leaves a lot more: for the existing investors on the table to realise once the lock-in period ends,” the investor said.

In Go Digit General Insurance majority owned by Fairfax ground domestic investor TVS Capital and A91 Partner are sitting on unrealized gains of 3.5-4 times.

To be sure Peak XV, A91 and TVS Capital did not sell any stake in Go Digit during the IPO.

Peak XV a late entrant to Go Digit’s Capitalisation table has recouped losses on its investment post the listing. Lower than its last private market valuation of $4 billion.

Peak XV formerly Sequoia capital India and Southeast Asia, hold more than $1.6 billion worth of stakes in its portfolio of listed companies that include software firm Freshworks, Honasa Consumer five Star Finance Indigo Paints and Prataap Snacks.

S-ET Image Source: Google

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