Wireless headphone giant BoAT cancels IPO, why are so many startups delaying market debuts?

India is the third largest market for true wireless earphones across the globe, and local brands account for more than 70 per cent of the shipments of the accessory in the country. Among other names such as pTron and Noise, BoAT dominates the Indian TWS space, with a market share of 46 per cent in the growing segment. After striking a chord with consumers, BoAT had the ear of investors when it announced an Initial Public Offering, but share buyers might have to wait longer.

Prefer private investment to uncertainty

This year, BoAT was supposed to raise Rs 2000 crore from a share sale on its stock market debut, which it has now called off. The decision to defer the issue came in the light of volatility that affects the market, and because BoAT has received Rs 500 crore from private investors. In addition to BoATs existing financier Warburg Pincus, a new player Malabar Investments has also contributed to its latest round of funding.

Reports suggest that according to the terms of this infusion, Malabar and Warburg Pincus will be able to convert preferred stocks into equity at a valuation of $1.2 billion, whenever BoAT goes forward with an IPO. BoAT’s CEO Vivek Gambhir told The Economic Times that they’ll enter the stock market when conditions are more suitable for growth.

Negative response from markets behind shelved IPOs?

This isn’t the first time when a startup has preferred to step back from an IPO in favour of private investment. Previously Snapdeal and Oyo also pushed their stock issues for months, and PharmEasy as well as Droom are also startups which shelved IPOs. Apart from volatile markets, a negative sentiment among investors is also reflected from the fact that five of the 10 worst IPOs last year were tech startups.

With 23 Indians startups waiting for their market debuts in quarters to come, the fact that those which have been listed are trading at significantly lower prices, is a cause for concern.

Published on: Saturday, October 29, 2022, 03:55 PM IST