Also in this letter:
■ Online gaming’s latest conundrum
■ Udaan CFO resigns
■ GenAI in customer engagement
Naspers’ Prosus may be tagged promoter in Swiggy’s $1 billion IPO
As food and grocery delivery platform Swiggy prepares for its $1 billion IPO, its largest investor Prosus might be tagged as a promoter. Meanwhile, New Delhi-based brand Boat is likely to reconsider its IPO plans this year. Let’s dive into the details.
Prosus’ dilemma: Prosus — the Dutch-listed investment arm of South African conglomerate Naspers — has been trying to bring its holding in Swiggy to below 26% (from 33%), but talks with potential investors didn’t fructify. Sources told ET that Swiggy’s upcoming IPO will see the majority of the public offering in a secondary share sale and is likely to have at least $600 million as an offer for sale (OFS) component.
Also read | Prosus reports 80% jump in Swiggy’s Jan-Dec loss
What do the rules say? As per current rules, an investor with over 26% stake would be considered a promoter. This means there would be restrictions on how much they can sell post-IPO. Considering this, SoftBank reduced its holding in FirstCry to around 25.5% from 30% before the company filed its draft red herring prospectus in December.
Quote, unquote: “Prosus has been in talks with several investors to dilute stake in Swiggy as part of a broader strategy to do secondaries across portfolio firms, but it hasn’t worked out due to a valuation mismatch in Swiggy,” a source told ET.
Boat’s IPO delay: Wearables and audio accessory company Boat is likely to reconsider its IPO plans this year after it pulled out of the market in 2022 citing market conditions. Boat is slated to hold a meeting later this month to reconsider a public offer. “There is definite interest to relaunch the IPO as there is momentum in the market. They (Boat) will take a call on it soon,” a person aware of the plans said.
New-age IPOs: After a tumultuous 12-18 months on the local bourses for technology-led startups, new-age firms are back in the IPO game. FirstCry, Ola Electric, Mobikwik, and Unicommerce are a few startups expected to list this year after having filed their draft IPO papers over the past few weeks.
Also read | 40 Indian startups slated to go public or be IPO-ready by FY25: Redseer
Revenue-linked financiers bet big on SaaS companies
Revenue-based financiers are increasingly seeing a big opportunity for cash-flow-based lending amid India’s early-stage software startups, as equity funding gets expensive and the bar for investments rises.
Driving the news: Over the past month, revenue-based financiers such as GetVantage and Velocity have set aside Rs 250 crore and Rs 300 crore, respectively, to cater to the growing demand for such kind of debt financing in the software-as-a-service (SaaS) industry.
What is the capital for? About 50-70% of the demand is coming from bootstrapped software startups who have found product-market fit and are looking for capital to scale their go-to-market (GTM) functions. This includes funding higher infrastructure cloud costs, digital marketing, and other functions as they grow.
Also read | Local SaaS firms under the thumb to retool for artificial intelligence
Why are financiers keen? For revenue-based financiers, which in the past were heavily focused on segments such as ecommerce and direct-to-consumer brands, the predictability and recurring nature of revenues of SaaS businesses, along with growth, are key factors to amp up focus on this sector.
Yes, but: Equity investors are wary of software startups piling up debt on their balance sheets, especially at a time when buyers are curtailing their software spends. Investors believe that instead of raising debt, SaaS startups need to be judicious about their investments and opt for moderate growth.
Gaming firms offer to pick up tax bill to keep players hooked
Despite the increase in tax liability, online platforms for real money gaming including Dream11, Mobile Premier League, and Games24X7 are running personalised offers and schemes, to keep regular gamers and influencers hooked to the platforms. But that is hitting their books.
What’s happening? Anil Malani, chief financial officer of Delta Corp which runs the Deltin Royal casinos and poker platform Adda52.com, said Adda52’s online revenue has slightly gone down from Rs 16-17 crore to Rs 13-14 crore month-on-month.
“That’s because the average ticket size and frequency of playing has gone down a bit. We are not encouraging our players to deposit large sums in one go because now you have to pay a hefty tax on deposits even before playing. This directly takes a hit on our bottom line also,” he said.
Also read | SC seeks response from taxman on ₹1L cr notices to e-gaming firms
Who’s doing what? Among online platforms, Dream11 is running a signup offer: Rs 100 cashback. Rummy Circle is offering 100% cashback as a welcome bonus on the first deposit and MPL Rummy provides Rs 75 credits on every successful referral.
Wait-and-watch mode: “As we navigate the transition to a new tax regime, the industry is in a watch mode… Over the next six months, the investors will gain a clearer understanding of the financial landscape and business models in this evolving environment,” a spokesperson of Play Games24X7 said.
Udaan CFO Aditya Pande resigns; firm announces senior-level changes
Udaan CFO Aditya Pande
Business-to-business (B2B) ecommerce firm Udaan said its chief financial officer, Aditya Pande, is leaving after a three-year stint. Pande has been appointed as group CEO of Interglobe Enterprises, which holds a 37% stake in IndiGo. He was previously the CFO of IndiGo, India’s largest airline.
Top deck changes: Udaan also announced other senior-level organisational changes. Kiran Thadimarri, the group finance controller, will be elevated to the executive management team. Reporting to the chief executive officer, he will be responsible for treasury operations, corporate finance and corporate audit.
Vishnu Menon, head, corporate strategy and investor relations, has been given additional charge of business finance.
CEO’s take: “These organisational changes are to promote future leaders from our strong talent pipeline while laying the foundation for the next phase of the growth journey. We believe that empowering our internal leaders will not only strengthen our operational capabilities but also drive sustainable growth,” cofounder and CEO Vaibhav Gupta said.
Also read | Udaan lays off over 100 employees shortly after $340 million fundraise
Catch up quick: ET reported on January 16 that Udaan’s valuation has fallen by nearly half to around $1.8 billion in a down round, marking one of the most precipitous drops for a startup that has raised over $1 billion. The company closed a $340 million financing last December by largely converting debt notes into equity. The round also included a fresh equity infusion.
Yellow.ai deploys 30% of global generative AI bots domestically
Generative artificial intelligence (GenAI) for customer engagement purposes is gaining momentum in India. Conversational AI company Yellow.ai deployed around 120 GenAI bots for businesses worldwide this financial year, of which about 30% were in India.
Different needs: Yellow.ai cofounder and chief executive Raghu Ravinutala told ET that while markets like the US are mostly using GenAI for customer support to cut costs, India Inc is using it to grow revenues, generate business leads and sales support.
The company expects the Indian market to grow over 60% next year, when revenue from India is expected to be $20-30 million with the overall global revenue at a $60-70 million run rate. It is currently at a $30-40 million revenue run rate globally, growing at 60-70% annually.
CEOspeak: “Q4 (the quarter ending January) is the largest quarter we are ever having for India in terms of platform ARR (annual recurring revenue) and India is also leading in terms of the GenAI adoption on the Yellow.ai platform,” Ravinutala said.
The company follows a February-to-January financial year.
Also read | Eye on GenAI, Indian IT companies seek opportunities to build and expand
Other Top Stories By Our Reporters
Ram temple effect: quick-commerce apps cash in on demand for religious items | Quick-commerce platforms such as BigBasket’s BB Now, Zepto, Blinkit, and Swiggy Instamart reported a surge in orders for items used in religious ceremonies following the inauguration of the Ram temple. These platforms capitalised on the event by promoting the sale of items such as lamps, flowers, incense sticks, coconuts and sweets.
Supreme Court to decide Google-CCI dispute finally on April 30: The Supreme Court on Monday said it will finally hear cross-appeals filed by Google and the Competition Commission of India in the antitrust case on April 30. A bench led by Chief Justice DY Chandrachud posted the matter for final disposal as counsel for both sides needed time to argue.
Global Picks We Are Reading
■ Cops used DNA to predict a suspect’s face — and tried to run facial recognition on it (Wired)
■ Apple’s sci-fi thriller Constellation gets haunting first trailer (The Verge)
■ British artists team up to fight AI image-generating software (The Guardian)
Also in this letter:
■ Online gaming’s latest conundrum
■ Udaan CFO resigns
■ GenAI in customer engagement
Naspers’ Prosus may be tagged promoter in Swiggy’s $1 billion IPO
As food and grocery delivery platform Swiggy prepares for its $1 billion IPO, its largest investor Prosus might be tagged as a promoter. Meanwhile, New Delhi-based brand Boat is likely to reconsider its IPO plans this year. Let’s dive into the details.
Prosus’ dilemma: Prosus — the Dutch-listed investment arm of South African conglomerate Naspers — has been trying to bring its holding in Swiggy to below 26% (from 33%), but talks with potential investors didn’t fructify. Sources told ET that Swiggy’s upcoming IPO will see the majority of the public offering in a secondary share sale and is likely to have at least $600 million as an offer for sale (OFS) component.
Also read | Prosus reports 80% jump in Swiggy’s Jan-Dec loss
What do the rules say? As per current rules, an investor with over 26% stake would be considered a promoter. This means there would be restrictions on how much they can sell post-IPO. Considering this, SoftBank reduced its holding in FirstCry to around 25.5% from 30% before the company filed its draft red herring prospectus in December.
Quote, unquote: “Prosus has been in talks with several investors to dilute stake in Swiggy as part of a broader strategy to do secondaries across portfolio firms, but it hasn’t worked out due to a valuation mismatch in Swiggy,” a source told ET.
Boat’s IPO delay: Wearables and audio accessory company Boat is likely to reconsider its IPO plans this year after it pulled out of the market in 2022 citing market conditions. Boat is slated to hold a meeting later this month to reconsider a public offer. “There is definite interest to relaunch the IPO as there is momentum in the market. They (Boat) will take a call on it soon,” a person aware of the plans said.
New-age IPOs: After a tumultuous 12-18 months on the local bourses for technology-led startups, new-age firms are back in the IPO game. FirstCry, Ola Electric, Mobikwik, and Unicommerce are a few startups expected to list this year after having filed their draft IPO papers over the past few weeks.
Also read | 40 Indian startups slated to go public or be IPO-ready by FY25: Redseer
Revenue-linked financiers bet big on SaaS companies
Revenue-based financiers are increasingly seeing a big opportunity for cash-flow-based lending amid India’s early-stage software startups, as equity funding gets expensive and the bar for investments rises.
Driving the news: Over the past month, revenue-based financiers such as GetVantage and Velocity have set aside Rs 250 crore and Rs 300 crore, respectively, to cater to the growing demand for such kind of debt financing in the software-as-a-service (SaaS) industry.
What is the capital for? About 50-70% of the demand is coming from bootstrapped software startups who have found product-market fit and are looking for capital to scale their go-to-market (GTM) functions. This includes funding higher infrastructure cloud costs, digital marketing, and other functions as they grow.
Also read | Local SaaS firms under the thumb to retool for artificial intelligence
Why are financiers keen? For revenue-based financiers, which in the past were heavily focused on segments such as ecommerce and direct-to-consumer brands, the predictability and recurring nature of revenues of SaaS businesses, along with growth, are key factors to amp up focus on this sector.
Yes, but: Equity investors are wary of software startups piling up debt on their balance sheets, especially at a time when buyers are curtailing their software spends. Investors believe that instead of raising debt, SaaS startups need to be judicious about their investments and opt for moderate growth.
Gaming firms offer to pick up tax bill to keep players hooked
Despite the increase in tax liability, online platforms for real money gaming including Dream11, Mobile Premier League, and Games24X7 are running personalised offers and schemes, to keep regular gamers and influencers hooked to the platforms. But that is hitting their books.
What’s happening? Anil Malani, chief financial officer of Delta Corp which runs the Deltin Royal casinos and poker platform Adda52.com, said Adda52’s online revenue has slightly gone down from Rs 16-17 crore to Rs 13-14 crore month-on-month.
“That’s because the average ticket size and frequency of playing has gone down a bit. We are not encouraging our players to deposit large sums in one go because now you have to pay a hefty tax on deposits even before playing. This directly takes a hit on our bottom line also,” he said.
Also read | SC seeks response from taxman on ₹1L cr notices to e-gaming firms
Who’s doing what? Among online platforms, Dream11 is running a signup offer: Rs 100 cashback. Rummy Circle is offering 100% cashback as a welcome bonus on the first deposit and MPL Rummy provides Rs 75 credits on every successful referral.
Wait-and-watch mode: “As we navigate the transition to a new tax regime, the industry is in a watch mode… Over the next six months, the investors will gain a clearer understanding of the financial landscape and business models in this evolving environment,” a spokesperson of Play Games24X7 said.
Udaan CFO Aditya Pande resigns; firm announces senior-level changes
Udaan CFO Aditya Pande
Business-to-business (B2B) ecommerce firm Udaan said its chief financial officer, Aditya Pande, is leaving after a three-year stint. Pande has been appointed as group CEO of Interglobe Enterprises, which holds a 37% stake in IndiGo. He was previously the CFO of IndiGo, India’s largest airline.
Top deck changes: Udaan also announced other senior-level organisational changes. Kiran Thadimarri, the group finance controller, will be elevated to the executive management team. Reporting to the chief executive officer, he will be responsible for treasury operations, corporate finance and corporate audit.
Vishnu Menon, head, corporate strategy and investor relations, has been given additional charge of business finance.
CEO’s take: “These organisational changes are to promote future leaders from our strong talent pipeline while laying the foundation for the next phase of the growth journey. We believe that empowering our internal leaders will not only strengthen our operational capabilities but also drive sustainable growth,” cofounder and CEO Vaibhav Gupta said.
Also read | Udaan lays off over 100 employees shortly after $340 million fundraise
Catch up quick: ET reported on January 16 that Udaan’s valuation has fallen by nearly half to around $1.8 billion in a down round, marking one of the most precipitous drops for a startup that has raised over $1 billion. The company closed a $340 million financing last December by largely converting debt notes into equity. The round also included a fresh equity infusion.
Yellow.ai deploys 30% of global generative AI bots domestically
Generative artificial intelligence (GenAI) for customer engagement purposes is gaining momentum in India. Conversational AI company Yellow.ai deployed around 120 GenAI bots for businesses worldwide this financial year, of which about 30% were in India.
Different needs: Yellow.ai cofounder and chief executive Raghu Ravinutala told ET that while markets like the US are mostly using GenAI for customer support to cut costs, India Inc is using it to grow revenues, generate business leads and sales support.
The company expects the Indian market to grow over 60% next year, when revenue from India is expected to be $20-30 million with the overall global revenue at a $60-70 million run rate. It is currently at a $30-40 million revenue run rate globally, growing at 60-70% annually.
CEOspeak: “Q4 (the quarter ending January) is the largest quarter we are ever having for India in terms of platform ARR (annual recurring revenue) and India is also leading in terms of the GenAI adoption on the Yellow.ai platform,” Ravinutala said.
The company follows a February-to-January financial year.
Also read | Eye on GenAI, Indian IT companies seek opportunities to build and expand
Other Top Stories By Our Reporters
Ram temple effect: quick-commerce apps cash in on demand for religious items | Quick-commerce platforms such as BigBasket’s BB Now, Zepto, Blinkit, and Swiggy Instamart reported a surge in orders for items used in religious ceremonies following the inauguration of the Ram temple. These platforms capitalised on the event by promoting the sale of items such as lamps, flowers, incense sticks, coconuts and sweets.
Supreme Court to decide Google-CCI dispute finally on April 30: The Supreme Court on Monday said it will finally hear cross-appeals filed by Google and the Competition Commission of India in the antitrust case on April 30. A bench led by Chief Justice DY Chandrachud posted the matter for final disposal as counsel for both sides needed time to argue.
Global Picks We Are Reading
■ Cops used DNA to predict a suspect’s face — and tried to run facial recognition on it (Wired)
■ Apple’s sci-fi thriller Constellation gets haunting first trailer (The Verge)
■ British artists team up to fight AI image-generating software (The Guardian)