The Indian e-commerce business Snapdeal, funded by SoftBank, has chosen to cancel its $152 million IPO, the company informed Reuters, becoming the latest victim of a collapse in IT stocks that have soured investor sentiment.
In December 2021, Snapdeal submitted regulatory documents for clearance of its initial public offering (IPO), a year that saw a record number of stock market debuts and records of startup funding from India. However, a stock market meltdown that has stoked worries about inflated tech valuations has caused several to postpone IPOs.
According to a person with firsthand knowledge of the situation, Snapdeal, which competes in India’s expanding e-commerce market with larger rivals Amazon and Walmart’s Flipkart, submitted a request this week to the country’s market regulator SEBI to have its IPO prospectus withdrawn.
According to the source, there is currently no demand for IT stocks, and SEBI has been informed of the current market conditions and other strategic choices that have resulted in the change in IPO plans.
Without going into further detail, Snapdeal informed Reuters that it had decided to withdraw the IPO prospectus “given the current market conditions”. According to its future cash needs and market conditions, Snapdeal may decide to revisit an IPO, the company adds.
In 2010, Wharton alumnus Kunal Bahl and Indian Institute of Technology grad Rohit Bansal founded the New Delhi-based Snapdeal. The business claims that by offering “value-for-money,” or cheaper, products on its shopping website and app, it serves the so-called value e-commerce market.
Snapdeal, which was valued at $6.5 billion in 2016, has suffered a decline in popularity as the market has become more competitive. It has experienced losses over the past three fiscal years, from 2019 to 2021, and was expecting to obtain fresh capital through an initial public offering (IPO) with a $1 billion valuation.
Snapdeal’s ambitions have changed as investors turn against Indian tech businesses that have recently gone public.
Shares of Paytm, an Indian company that specialises in digital payments, have fallen 76% since its IPO in November 2021, when it raised $2.5 billion in one of the largest IPOs in the history of the nation.
After going public in July 2021, the shares of food delivery service Zomato have fallen by half from their peak levels.
PharmEasy, a $760 million Indian online pharmacy funded by TPG and Prosus, and boAT Lifestyle, a supplier of wireless earbuds supported by Warburg Pincus, both withdrew their papers for their IPOs in August and October, respectively.
According to the first source, Snapdeal hasn’t set a new deadline for when it might refile its IPO.
With the proceeds of its initial public offering (IPO), which was planned to include a fresh issue of shares worth 12.5 billion rupees ($152 million) and an offer for sale of 30.8 million shares, Snapdeal had hoped to fund organic growth plans. The Ontario Teachers’ Pension Plan Board, Sequoia Capital, and SoftBank had all made offers to sell a portion of their IPO stakes.