India’s IPO mania gets reality check, start-ups defer public debut

India’s IPO mania gets reality check, start-ups defer public debut


A boom in technology initial public offerings in India risks grinding to a halt after several of the country’s highest-profile startups tanked soon after listing.

A raft of prominent tech startups, including Oyo Hotels and logistics provider Delhivery, are pushing back their public debuts and preparing to reappraise target valuations, according to people familiar with the situation. The duo, both backed by SoftBank Group Corp., had been among the country’s highly anticipated offerings.

India’s burgeoning startup ecosystem faces a reckoning just weeks after it closed out a record year for IPOs. Investors have soured on new tech offerings after the calamitous public debut of fintech firm Paytm, as well as the battering received by newly listed e-commerce operators Ltd. and Nykaa. Regulators have stepped up scrutiny of IPO candidates after investors got burned, contributing to the delays.

“Investors are no longer enamored of the household name startups; they want a path to profitability and returns, not hype and hoopla,” said Anup Jain, a managing partner at early-stage investor Orios Venture Partners.

An Oyo spokesman said by e-mail that it is standard procedure for the regulator to ask for clarifications of a preliminary IPO filing, adding “our bankers are actively engaged with them. We can’t comment on specifics.” declined to respond.

The owners of have pushed back its approximately $1 billion IPO to the fiscal year starting in April, said some of the people, asking not to be named because the details are private. is also reviewing its listing plan after the stock market regulator frowned on a planned sale of a substantial amount of shares by investors in the IPO, the people said. The logistics startup, backed by Carlyle Group Inc. as well as SoftBank, had previously planned to list by March.

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Oyo, which came under scrutiny for its ownership structure and heavy losses after filing preliminary IPO documents last year, is now facing regulatory questions too. India’s watchdog has made queries about Oyo’s ongoing litigation with hostel operator Zostel Hospitality Pvt., which is claiming a stake in the company after a failed merger in 2016.

The approval for the draft prospectus of Oyo’s planned $1.2 billion IPO has been pending for almost five months. Its investors include Sequoia Capital and Lightspeed Venture Partners, as well as SoftBank.

The management and bankers of Oyo, formally called Oravel Stays Ltd., are not in a rush, however, said one of the people. They are taking their time to respond to the regulator’s queries to slow down the listing process on purpose, the person said.

Also up in the air are the IPO timings of Pharmeasy, which goes by API Holdings Ltd., and automobile marketplace Droom Technology Ltd., which filed initial IPO documents in November. Pharmeasy’s investors include Prosus Ventures and TPG, while Droom is backed by Beenext and Lightbox Ventures.

Spokespeople for Pharmeasy and Droom declined to comment.

India’s first-ever tech IPO rush marked a monumental year of exits for global investors in 2021. Paytm’s parent company, One 97 Communications Ltd., raised a record $2.5 billion when it went public in November. But its shares have plummeted 60% from their IPO price, infuriating investors and fueling concerns among regulators. A broader decline in tech stocks in India and beyond has only added to the gloom.

Even the U.S. IPOs of startups Druva Inc., InMobi Pte. and Pine Labs Pvt. have been put off or deferred to the second half of 2022 or later, some of the people said. Sunnyvale, California-based software-as-a-service provider Druva, Singapore-based mobile solutions startup InMobi and fintech Pine Labs were all founded in India, where they still have the bulk of their operations.

A Druva spokesperson said by email that “the company will continue to monitor market and industry conditions and will do what best positions Druva for future growth and success.”

InMobi and Pine Labs did not respond to requests for comment.

Hanging over the Indian listings is a big unknown: the fate of the massive public share sale of state-owned Life Insurance Corp. of India, which filed its draft prospectus over the weekend. The final valuation and investor interest in what’s being called the “mother of all Indian IPOs” could dictate the course of technology companies’ listing plans, multiple people said.

Sandeep Murthy, a Mumbai-based partner at Lightbox, said concerns among public market investors are intensifying after two years of “rocketing” growth.

“Last year was all about greed and, short of an alien invasion, the market was ready to accept anything,” Murthy said. “Right now, fear is creeping up but give it some time, greed will be right back.”


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