Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Listing India's tech prospects

Written by Li-Ann Chin, associate
Edited by David Gaffney, associate partner

22 November 2021

Good morning,

Headquartered in Gurgaon, India, Zomato is a food delivery and restaurant discovery platform that provides information and user reviews of restaurants as well as delivery options from partner restaurants. The company went public in Mumbai in July this year, in a highly anticipated initial public offering (IPO) that was more than 35 times oversubscribed. It was, at the time, a loss-making company with no real properties or assets. And yet, Zomato’s IPO was able to command a high valuation and attract the attention of heavyweight investors like Fidelity, Morgan Stanley, Canadian Pension Fund, and the Singapore Government. Speaking in an interview with ET, Deepinder Goyal, co-founder and CEO of Zomato, confessed that the company’s decision to float was not necessarily by design, but rather a “desperate contingency plan”. Analysts point to this as evidence of a private –and public market bull run in India that some say is teetering on the edge of “bubble territory”. China’s big tech crackdown, which wiped hundreds of billions off the market capitalisations of some of its largest companies, has unnerved investors and pivoted them towards India’s fast-growing tech industry. Indian entrepreneurs say they have never seen so much competition for deals. Paytm, a homegrown payments company that covers everything from digital payments and insurance, launched a $2.5bn listing last Thursday, India’s largest ever IPO. As India’s answer to Chinese “super apps”, it will be scrutinised in the coming months as an indication of whether the country’s start-ups can recreate the success of a generation of Chinese tech groups that remade the country’s stock market, and provide the exit routes investors need to have confidence in the market. Shares in Paytm have so far fallen by more than a quarter since its debut. After years of being sidelined by investors, India is relishing its time in the spotlight. Nykaa, a cosmetics and beauty products ecommerce group, doubled its issue price after its November debut. Oyo, the SoftBank-backed hotel group, is reportedly looking to raise $1.1bn through a listing. Ola, a ride-sharing company trying to branch out into electric vehicle manufacturing, is expected to file for a $1bn IPO and will list domestically in 2022. “In a way, this is India’s moment of coming on to the global stage,” Bhavish Aggarwal, Ola’s chief executive, says. “You’ll see a lot of value creation coming from India.”

News

Fresh unrest erupted in the Netherlands this weekend as hooded rioters hurled fireworks at police and set fire to bicycles in The Hague, protesting against new Covid-19 restrictions implemented by the Dutch government to tackle rising infections. Tens of thousands of people also protested in Vienna, Austria’s capital, after the government announced a new national lockdown and plans to make vaccinations compulsory in February 2022. The country will enter a 20-day nationwide lockdown starting today. Speaking to Sky News on Sunday, the UK’s health secretary Sajid Javid played down the need for more restrictions to be introduced in the coming weeks, saying that England is “firmly” in plan A at the moment. Javid stated he believes England has the “right measures” in place to curb infections, the country’s successful booster programme being the most important, but warned that the virus “can be very unpredictable” and ministers “need to be ready” to act. Prime minister Boris Johnson is set to face a backbench rebellion over controversial plans to scale back the social care cap, with MPs due to vote on the proposal today evening. The Department of Health and Social Care announced last Thursday that it would look to calculate the £85,000 cap on lifetime care costs in a way that could leave tens of thousands of England’s poorest pensioners paying the same as wealthy people. Some of the conservative MPs considering a vote against these proposals include Robert Buckland MP and Christian Wakeford MP. An investigation by The Times reveals MPs have channelled hundreds of thousands of pounds in private consultancy work through personal companies in a move that may have significantly reduced their tax bills, with at least 10 MPs identified as having done so. The biggest advantage to using a company to accept payments for consultancy work is being able to avoid income tax of up to 45% at the source on the earnings. The named MPs include Mark Pritchard, Sir Bob Neill, education secretary Nadhim Zahawi and former minister Jake Berry. (£)

Business and economy

Telecom Italia held an emergency board meeting yesterday to evaluate a takeover offer from US private equity group KKR, a deal that would be one of the largest telecommunications buyouts of all time. KKR is said to already hold a 37.5% stake in Telecom Italia’s network. The company has struggled in recent quarters and issued two profit warnings in the past year. The Bank of England will raise interest rates if inflation in the UK evolves as expected, but the situation is “febrile”, with data giving a mixed picture, said the central bank’s governor Andrew Bailey over the weekend. This suggests that a rise in interest rates at December’s meeting of the Monetary Policy Committee is not yet confirmed. (£) THIS IS THE WRONG LINK LC British retailer Marks & Spencer is said to be preparing for chief executive Steve Rowe to step down from his position within the next 18 months. There have been no formal conversations with the M&S board about a departure date, but senior figures are aware that Rowe believes that chief executives typically have a tenure of between five and eight years. Shares in the company are up 83% so far this year on the back of two profit upgrades and there is no investor pressure on Rowe to exit. (£)

Columns of note

I was fortunate enough to take the train from London to Edinburgh for the first time last week. For four hours and 21 minutes, I was treated to the most spectacular scenic highlights as the green rolling hills and valleys of England gradually made way for the dramatic Scottish coastline. The 500km journey felt like pure magic. Written by Ian Jack in The Guardianthis piece makes for an interesting read on the enduring romance of train travel and the climate-friendly alternative it poses to short-haul flights, which are known to be one of the worst offenders for carbon emissions. The London to Edinburgh train ride is the example he leads with. Suffering from an unprecedented financial crisis caused by the pandemic, Transport for London is engulfed in a desperate battle for another handout from Whitehall. Without it, London’s bus services could be slashed by one-fifth and underground rail by almost one-tenth. Not only will this have a devastating effect on the many passengers that rely on the services, it will jeopardise the national recovery, London Mayor Sadiq Khan argues in the FT. “There can be no national economic recovery without a London recovery, and there can be no London recovery without a properly-funded public transport network,” he writes.

Markets

The week ahead

Thanksgiving holiday falls on Thursday in the US, and the celebrations for Hanukkah, the Jewish Festival of Lights, and the Christian season of Advent kick-off next Sunday. We are now at the tail-end of earning season and the start of the holiday season which means this week’s statistical and events calendar is a little thin. In terms of economic data, highlights are likely to be the flash purchasing managers’ index surveys that will enable comparisons in the relative health of G7 nations and a run of surveys in Europe and the UK. Monday will see flash consumer confidence figures for the EU released whilst energy trends and prices data in the UK will be out on Thursday. Germany and Switzerland are set to publish their Q3 GDP figures on Thursday and Friday respectively. In the US, expect data for residential property sales and a revised Q3 GDP figure to be published. Zoom, the video conferencing platform, will report quarterly numbers on Monday and investors will look to be reassured of its plans to broaden its scope given that employees are returning to the workplace and are becoming less reliant on screen-based meetings. The UK-based household appliances specialist AO World, Compass Group, Dell Technologies and HP are expected to publish results on Tuesday. Both Deere & Company and Virgin Money are reporting their full-year results on Wednesday. The working week wraps up with the Bank of England chief economist Huw Pill giving a speech on the economic outlook on Friday, hosted by the CBI North East. Expect a consumer frenzy on Black Friday which will provide an indication of the health of the retail sector across the globe.

What’s happening today?

Finals
Carrs GroupCerillionDiploma

Interims
Augmentum Fint.Big YellowCentralnicSysgroupThruvision Grp

AGMs
Allergy Thera.Crystal Amber

Trading Announcements
Diploma

Int Economic Announcements
(07:00) GFK Consumer Confidence (GER)(09:00) IFO Expectations (GER)(09:00) IFO Current Assessment (GER)(09:00) IFO Business Climate (GER)(15:00) Existing Home Sales (US)

Source: Financial Times

did you know

Section three of the 25th Amendment to the United States constitution, which allows vice presidents to take over when the president is incapacitated, has been used only three times. In each case, the president was having a colonoscopy

Parliamentary highlights

House of Commons

Oral questionsHome Office (including Topical Questions) LegislationHealth and Care Bill (Day 1): Remaining stages AdjournmentBioYorkshire and developing the bioeconomy

House of Lords 

Oral questionsVarious LegislationEducation (Environment and Sustainable Citizenship) Bill – committee stagePolice, Crime, Sentencing and Courts Bill – committee stage (day 10)

Scottish parliament 

No business scheduled.

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