SoftBank's Sumer Juneja on India's Tech IPO Landscape and Investment Strategy

IT offshoring reversal; Ola Electric, Oyo financials

Happy Independence Day! IT offshoring, which is aimed at cost optimisation, is reversing. Details on this and more in today's ETtech Morning Dispatch. Also in this letter: ■ Byju's vs BCCI in NCLAT ■ China's bet on GenAI models ■ Swiggy tweaks service fee policy Programming note:ETtech Morning Dispatch & Top 5 will be off on Friday. Stay tuned to ETtech.com for all the news and updates. Large offshoring, which took off in the last two years, on the back of numerous cost optimisation deals has either halted or started reversing, as per experts. Driving the shift: "The reversal in trend is largely due to the significant move over the last year from onshore to offshore. It is now balancing out with a modest swing the other way. There is a limit to how far the offshore lever can be pulled before clients ask for more onshore," said Peter Bendor-Samuel, chief executive at Everest Group, a consulting and research firm. Wipro, LTIMindtree, Coforge, Mphasis, and Happiest Minds have seen their offshore contribution (efforts or revenue) decrease in the first quarter of fiscal 25. Also Read: Digital transformation deals back in play for IT industry with a cost twist Jargon buster: Offshoring is the practice of relocating work to another country to cut costs and increase efficiency and had seen an increase in the last five to six quarters. Expert take: Generally, during a slowdown, offshoring increases, said Gaurav Vasu, founder, UnearthInsight, a tech market intelligence firm. Vasu added, "However, during the last 18 months, the offshoring mix has been under pressure due to the changing nature of deals, the new skill mix, and the reduced need for freshers offshore. We saw 0.5-1.5% growth in nearshore / onsite headcount, led largely by M&A, digital transformation, or BoT/BOOT deals for the likes of HCLTech, TCS, etc." Also Read: Source of IT's pain decoded: why clients are pulling back outsourced work in-house Bhavish Aggarwal, founder, Ola Electic Electric scooter maker Ola Electric on Wednesday reported a 32% jump in revenue for the first quarter of fiscal year 2025 to Rs 1,644 crore. Key numbers: New announcements: The firm said it delivered over 1.2 lakh scooters during the quarter, adding that it will launch a line of electric motorcycles on August 15. It said that it has also started the production of its own battery cells and expects to use its own cells in its vehicles by the first quarter of FY26. Also Read: Lowered IPO price to rope in a wider set of investors: Ola Electric CEO Bhavish Aggarwal Nazara net profit up 13% to Rs 24 crore in Q1: Media and gaming firm Nazara Technologies reported a 13% increase in net profit to Rs 23.6 crore for the first quarter of fiscal year 2025, even as its quarterly revenue dipped slightly. The firm's operating revenue fell 1.7% to Rs 250 crore on a year-on-year (YoY) basis for the quarter ended June 30, 2024. Oyo posted Rs 229 crore net profit in FY24: Ritesh Agarwal: Hospitality startup Oyo posted a net profit of Rs 229 crore for FY24, founder and chief executive Ritesh Agarwal said. In a post on X, Agarwal said the audited results have been published after adoption by the company board, but financial statements for FY24 were not available with the Registrar of Companies (RoC) by Thursday noon. Also Read: Aris Infra files draft IPO papers, plans to raise Rs 600 crore The Supreme Court on Wednesday stayed the National Company Law Appellate Tribunal's (NCLAT) order approving the settlement between edtech firm Byju's and the Board of Control for Cricket in India (BCCI) over unpaid dues of Rs 158 crore. The tribunal had earlier quashed the bankruptcy proceedings initiated by the BCCI against Byju's after a settlement between the two parties. Fine print: Solicitor General Tushar Mehta, appearing for the BCCI, opposed the appeal against the NCLAT order. He said the earlier settlement with Byju's will not stand in light of the stay. The Supreme Court bench, led by CJI DY Chandrachud, asked the cricket administrator to keep the settlement amount in a separate account until August 23 - the next date of hearing. Appeal in top court: The NCLAT order was appealed by Glas Trust, the trustee for lenders to which Byju's owes $1.2 billion. Glas Trust had alleged that the money being paid to the cricketing authority by Riju Ravindran, brother of the company's founder, Byju Raveendran, was tainted. Counsel for Ravindran had said he would be using personal funds to make the payment. Background: The BCCI had moved NCLT under the Insolvency and Bankruptcy Code (IBC) over a default of Rs 158 crore by Byju's parent, Think & Learn. The company had signed a jersey sponsorship agreement with BCCI in March 2019 for three years, which was extended by a year. The company made the payments until September 2022, and the dispute is over the non-payment during the period October 2022 to March 2023. Explained: China's bet with Jimeng and other GenAI models: TikTok parent ByteDance last week launched a new text-to-video generative AI app called Jimeng AI, said to be a rival to OpenAI's Sora, which is yet to be made publicly available. We take a close look at Jimeng and other Chinese GenAI models and their place in the global AI race. Swiggy tweaks service fee policy; non-metro restaurants to pay more in commision: IPO-bound food delivery firm Swiggy has started charging its service fee on the gross order value, which includes GST and packaging charges too, from restaurants outside metro cities as well. This will effectively increase the commission its restaurant partners in such markets pay. Ecom Express secures board nod for Rs 2,600 crore IPO: Ecom Express board has approved the plan for a Rs 2,600 crore IPO. According to the company's internal documents accessed from the RoC, Ecom Express is considering a fresh issue of up to Rs 1,284.5 crore and an offer-for-sale (OFS) component of up to Rs 1,315.5 crore. Flexiloans to raise $35 million in fresh equity: Flexiloans, a digital lending platform for small businesses, is in talks with a bunch of large global and domestic investors to raise around Rs 300 crore ($35 million) in a fresh equity round, two people in the know said. ■ Amazon, Meta, and Big Tech's bid to rewrite the rules on net zero (FT) ■ The Tech Job Paying Six Figures, No College Degree Required (WSJ) ■ The ACLU Fights for Your Constitutional Right to Make Deepfakes (Wired)

SoftBank's Sumer Juneja on IPO gains; Tendulkar's new innings

SoftBank's Sumer Juneja spoke to us on listing gains snagged by their portfolio firms, fresh deals and more. Details on this in today's ETtech Morning Dispatch. Also in this letter: ■ Nykaa, Awfis Q1 results ■ IT deals revival ■ ETtech Done Deals The listing pop seen by Ola Electric, FirstCry, and Unicommerce was driven by sensible IPO pricing, favourable macroeconomic conditions and the growing acceptance of technology firms by the capital markets, Sumer Juneja, managing partner for India & EMEA at SoftBank, told us in an interview on Tuesday. On India performance: "The portfolio has performed well, and with the current market value of our public investment and past exits, we would have returned $10 billion-plus with a strong portfolio (Meesho, Swiggy, Lenskart, Whatfix, OfBusiness) yet to be monetised," Juneja added. Profitability in focus: Juneja said, "If you have a credible story and can back it up with a path to profitability, then the public markets are patient, as seen with Zomato and Ola Electric." "There is room for all kinds of tech firms to go public in India, you can be the size of Ola Electric or Unicommerce... the market depth has increased a lot in the last few years," he added. SoftBank's bets: Post-listing gains clocked by Ola Electric, FirstCry, and Unicommerce have boosted the worth of SoftBank's stakes in these companies to almost Rs 16,000 crore, or nearly $2 billion, based on the latest stock prices of these three companies. SoftBank has already realised around $400 million, or around Rs 3,300 crore (at current exchange rates), from secondary stake sales in the three companies. Also read: We were at it for 14 years: FirstCry CEO Supam Maheshwari on bumper market debut FirstCry lists at 35% premium: Brainbees Solutions, which operates kidswear brand FirstCry, made a stellar debut on the stock exchanges on Tuesday. Unicommerce turns multibagger: Ecommerce software firm Unicommerce Esolutions also listed on the bourses on Tuesday at Rs 230 on the BSE, a 113% premium over its issue price of Rs 108. The stock closed at Rs 210.05, down almost 9% from its opening price. Also read: If our markets have to grow, we need more homegrown companies to list: Nithin Kamath Today we have a scoop on cricketing legend Sachin Tendulkar's entrepreneurial venture. You can't miss this one! A new pitch: Tendulkar is joining hands with former Swiggy Instamart head Karthik Gurumurthy to start a sports athleisure brand. Karan Arora, a former Swiggy executive, is the third cofounder. The company was incubated under early-stage venture fund Whiteboard Capital, sources told us. On the front foot: For the ace cricketer, the new venture will see him get closely involved in the business and operations, unlike a typical brand-celebrity endorsement deal. Power play: Tendulkar is already a director at SRT10 Athleisure Private Limited-the holding company for the venture, filings showed. A top venture fund is in advanced stages of talks to invest in the firm, sources added. Game on: Demand for sports goods and apparel is at an all-time high in India, and venture investors are increasingly backing new ventures to disrupt the incumbents. Former Puma India head Abhishek Ganguly's Agilitas Sports has raised over Rs 550 crore over a year and recently acquired Italian shoe maker Lotto's India licence for 40 years. Tell me more: Tendulkar is working on the products closely with the other cofounders, sources added. "They are likely to position it as a rival to top brands like Nike, but at an affordable pricing, with local manufacturing at play as well as government policies promoting local manufacturing," one of the sources said. "They will soon launch products in sports like cricket and badminton." FSN E-commerce Ventures, which operates the Nykaa brand, has clocked a 152% growth in its net profit on year in the April-June quarter. Financials: Tell me more: The company's board also approved the acquisition of a 39% stake in wellness brand Dot & Key Wellness, taking its existing majority stake of 51% to 90%. It added more than 1,500 brands this year, taking the cumulative count to over 6,700 international and domestic brands. Its store count also crossed 200 this quarter. Dip in fashion: Despite the over 20% growth in revenue, the fashion segment saw slower-than-expected growth, Nykaa's senior executives said. This is because the "anchor category" of Indian and ethnic wear performed poorly during the quarter amid a lack of events and festivals. Also read: Nykaa grants 4.73 lakh shares under Esop scheme Awfis posts Q1 net profit: Office space-sharing company Awfis reported a net profit of Rs 2.8 crore for the quarter ended June, against a loss of Rs 8.3 crore a year earlier. The June-quarter operating revenue of the company, which is backed by Peak XV Partners, stood at Rs 258 crore, up by 37% from a year ago. The global market for information technology (IT) deals is expected to balloon, with nearly 700 contracts worth $26 billion due to be renewed in the five months to December, industry data shared exclusively with us shows. By the numbers: Of the contracts up for grabs, around 16 are worth over $500 million or more, and approximately 62 deals are over $100 million, according to UK-based technology research and advisory firm Omdia. Industry experts are of the view that in the full calendar year 2024, a total of around $48 billion worth of contracts would have been up for renewal. Indian software exporters have publicly disclosed bagging cumulative contracts worth about $1.5 billion in the first quarter of fiscal 2025. Ram Iyer, founder, Vayana Network Vayana bags $20 million: Trade finance platform Vayana has raised $20.5 million from investors led by Sumitomo Mitsui Banking Corporation (SMBC) Asia Rising Fund to fuel its plan to introduce new products. Beco raises $10 million: Home and personal care brand Beco has raised $10 million in a funding round led by Tanglin Venture Partners. Ethnic wear brand Fashor secures $5 million: Ethnic wear brand Fashor has raised $5 million in a funding round from early-stage venture capital firm Blume Ventures in a mix of primary and secondary transactions. Sarvam AI unveils mix of open source, enterprise products: Bengaluru-based artificial intelligence startup Sarvam AI on Tuesday launched a slate of products, both for enterprise usage and open source, as part of its full-stack Generative AI (GenAI) platform. IT firm Happiest Minds reports growth in BFSI vertical: IT firm Happiest Minds saw its banking financial services and insurance (BFSI) vertical's contribution going up by 540 basis points, even as its US' contribution coming down by 250 basis points in the just concluded quarter of this fiscal. Acquisitions in the first quarter influenced both BFSI and US geography, said Executive Vice Chairman Joseph Anantharaju. ■ Jobhunters flood recruiters with AI-generated CVs (FT) ■ AI Is About to Boost Power Bills -- Who'll Take Heat for That? (WSJ) ■ Donald Trump Doesn't Need X -- but Elon Musk Desperately Needs Him Back (Wired)

Fair pricing, macros aiding listing pop for new-age tech IPOs: SoftBank's Sumer Juneja

The Masayoshi Son-led Japanese group's cumulative holdings across the three recently listed companies, Ola Electric, FirstCry and Unicommerce, stand at about $2 billion following their market debut. Sumer Juneja credited domestic mutual funds for boosting demand. The listing gains snagged by SoftBank's India portfolio firms Ola Electric, FirstCry and Unicommerce are the result of sensible initial public offering (IPO) pricing, favourable macroeconomic conditions and the growing acceptance of technology firms by the capital markets, said Sumer Juneja, managing partner for India and EMEA at SoftBank. In an interview to ET on Tuesday, he said that the active participation of domestic mutual funds has helped shore up demand for these public offerings. It's not true that these new-age IPO are gaining only because of the continuing bull run in the stock markets, he added. The Masayoshi Son-led Japanese group's cumulative holdings across the three recently listed companies stand at about $2 billion following their market debut. SoftBank had pumped $400 million into FirstCry, which listed at a premium of 40% to its issue price of Rs 465 per share. Shares of e-commerce software firm Unicommerce, in which it invested nearly $15 million, listed at a 117% premium to its issue price of Rs 108 while Ola Electric, in which SoftBank owns 22%, is trading 71% up from its listing price of Rs 76. SoftBank has deployed $10.5 billion across its two editions of the Vision Fund and its balance sheet in India. "The big picture for us is that we have been the largest tech investor in India," Juneja said. "The portfolio has performed well, and with the current market value of our public investments and past exits we would have returned $10 billion-plus with a strong portfolio (Meesho, Swiggy, Lenskart, Whatfix and OfBusiness) yet to be monetised... The range of our exits has been 0.7x-4.0x across portfolio firms." Till three years ago, when the first cohort of Indian tech companies went public, the assumption was that loss-making firms won't find takers among domestic institutional investors and that only foreign institutional money would line up, but that has changed, Juneja told ET. "There is room for all kinds of tech firms to go public in India. You can be the size of Ola Electric or Unicommerce... The market depth has increased a lot in a few years," he said. Bhavish Aggarwal-founded Ola Electric raised about Rs 6,145 crore, while Unicommerce launched a small sized Rs 276 crore issue. Juneja said if you have a credible story and can back it up with a path to profitability, then the public markets are patient, as seen with Zomato and Ola Electric. All of this is making companies come back from the US and Singapore to India, a sign that the markets have matured, he said. "These companies ( ones recently listed) went for a cut in their valuation compared to their last private round value... It is sensible pricing and I am not surprised by the pop," Juneja said. "FirstCry closed today at a market capitalisation of around $4.5 billion. It's not too far from what people had thought the value would be... We wanted it to be a successful IPO and investors subscribing across HNIs (high net-worth investors), retail, institutions to be confident and play for the long-term. So, I don't think it's a frothy market. The pop reflects sensible pricing and strong business fundamentals." SoftBank has already cashed out $320 million through a secondary share sale in FirstCry, with the remaining position valued at about $850 million. As for Ola Electric, which listed on the bourses on August 9, the group invested $250 million in multiple tranches, and the company has crossed market capitalisation of Rs 51,000 crore in just three days after its stock market debut. SoftBank's stake has gained more than three times in valuation due to the surge in the last three sessions. "We have seen the long association of Masa with Alibaba... If we think it's a compounding story, we will hold it for decades," Juneja said when asked about selling stakes in SoftBank's portfolio firms which went public in 2021. He said SoftBank continues to hold more than 14% stake in Delhivery, which went public in May 2022. The logistics firm is trading below its listing price of Rs 487, at Rs 408.5 as of Tuesday at the close of trade. SoftBank had seen a set of IPOs in 2021-2022 from its portfolio such as Paytm, Policybazaar and Delhivery. The investor has fully sold its positions in Paytm and Policybazaar. Its other exit in India includes the sale of its Flipkart stake for $4 billion to Walmart in 2018. It had invested $2.5 billion in Flipkart in 2017. In 2021, it reinvested in Flipkart as part of a broader $3.6 billion round. Juneja said the fund is keen to strike fresh deals in the private market but there aren't too many options available in the growth stages. "We are very keen to deploy and we need to find the next cohort of entrepreneurs. It will be all tech first with an AI lens," he said. "The opportunity for us will always be in tech. We have seen a lot of transactions in our companies like Lenskart, Meesho and Swiggy." Asked whether the fund would consider writing smaller cheques of $20-30 million, he said, "We have always been flexible and pivot as our entrepreneurs, and we pride ourselves for doing that. If the market has become more capital efficient, founders do not want to dilute large stakes, which you are already seeing, we will adjust." Juneja further said, "India is too important for us to stay out of the market. To be fair, we can start with a smaller cheque and always come in when companies need to press the pedal."