startup unicorns: startup unicorns eye IPOs to talk tech with India’s leading mutual fund companies

More than a dozen servants institutional investors (DII) including the likes of HDFC Mutual FundAxis Mutual Fund, Mirae, with $250 billion under management, met with the founders and management teams of Indian unicorns Swiggy, Meesho, Unacademy, Lenskart and Acko, among others, all of which are eyeing a potential stock exchange listing in the next two years.

The two-day meeting, held in Bangalore and hosted by Japan Soft Bank and JP Morgan, aimed to help the national community of public investors understand some of the technology companies and their path forward. The meeting is significant because it comes at a time when the global tech industry is going through a major correction in private and public market valuations.

“DIIs are a vital part of the Indian stock market, and they will only grow in importance over time…As more tech companies go public and become a larger part of indices, it is critical that these two build a relationship and understand each other better,” said Sumer Juneja, Managing Partner and Head of India, SoftBank Investment Advisers.

Last year, eight Indian startups were listed on public markets, including , , PolicyBazaar and – seven of them being on national stock exchanges.

However, DIIs had a mixed view of these technology lists. For example, during
Listing of Zomato in July 2021, nearly 19 domestic mutual funds have participated in its anchor book across 74 programs. These included big names such as Kotak MF, ICICI Prudential,

MF and Aditya Birla Sun Life Insurance, among others.

When listing parent company Paytm One97 Communications in November, only four local management companies participated in the anchor book.

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According to people who attended the closed-door meeting, DIIs remain cautious about backing startups.

“There is a sense of caution that DIIs might have towards high-growth companies, as they seek predictability in business models and outcomes…However, they understand the age-old trend of investing in tech stocks that can potentially create value over the next 10 to 15 years,” said one of the people who attended the meeting.

A clear example of this was in Nykaa’s anchor book participation, where of the total allocation to anchor investors, 70,98,801 shares or 33.33% of the total were allocated to 21 domestic mutual funds through 93 programs.

Unlike the venture capital community, which encourages pivots and high growth of a startup, DIIs focus on the very execution stability of some of the companies listed last year, said another person who has met with asset managers.

The meeting comes at a time when shares of Indian tech companies listed last year, such as Zomato and Paytm, have seen sharp declines. Shares of listed digital startups also declined globally, following inflationary pressures and rising interest rates.

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