Exclusive: India mulls new valuation norms for angel tax; Amazon, Samara eye stake sale in More Retail

Also in this letter:
■ VC fund Chiratae marks final close of maiden growth fund
■ Majority IAMAI members opposed to separate competition law
■ NCLAT ruling leaves App Store providers disappointed

Exclusive: Government may adopt FEMA-like valuation norms for angel tax

In what could be a breather for Indian startups, India might accept the valuation criterion followed under FEMA for angel tax on investments from overseas investors for clarity and to end tax disputes.

What’s driving the news? The RBI-administered FEMA accepts valuation from a Sebi-registered Category 1 merchant banker using any of the internationally accepted pricing methodologies applied on an arm’s length basis. The taxmen are considering adopting the same for angel tax among other options.

Catch up quick: We reported on April 25 that startups were lobbying with the finance ministry to scrap, or at least increase, the Rs 25-crore threshold for angel tax exemption, claiming that only a small percentage of startups can meet this limit.

Yes, but: Other options being examined include providing a carve-out — selling a portion of the business — for investments by pension funds, and sovereign wealth funds besides being recognised by funds from countries under the International Organisation of Securities Commission. If such an exception is provided, angel tax will not be levied.

Exclusive: Amazon, Samara Capital look to sell 15-20% stake in More Retail

Amazon and investment fund Samara Capital acquired More retail chain from the Aditya Birla Group in 2019 for nearly $600 million. Four years later, they are planning to onboard external investors ahead of a potential IPO in the next 12-18 months, which we reported in September 2022.

Deal details: More’s investors are looking to divest about 15-20% stake at a proposed valuation of around $2 billion, sources told us. Amazon owns 49% of More parent Witzig Advisory while Samara Capital owns 51%.

What’s more? Amazon wants to further integrate More Retail stores with its online grocery offering Amazon Fresh, sources told us. This is to boost growth plans of More amid increased online adoption for groceries and essentials. In New Delhi and Bengaluru, Amazon Fresh has piloted store pickups of grocery orders.

In January, Amazon-owned Coda Holdings Singapore infused about Rs 32 crore in More which had over nine hundred stores across formats in the country. Prior to that, we had reported that about Rs 200 crore was infused in Witzig in FY23.

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Chiratae marks final close of maiden growth fund at Rs 1,001 crore

Indian venture capital (VC) firm Chiratae Ventures marked the final close of its maiden growth fund at Rs 1,001 crore ($112.4 million), as it looks to double down on growth-stage investments.

The VC firm, which has backed Policybazaar, Curefit and Firstcry, announced the first close of the Chiratae Growth Fund (CGF-I) in November last year at Rs 759 crore as it looked to focus on growth-stage rounds including Series C and beyond.

Tell me more: Existing investors like Infosys cofounder S Gopalakrishnan’s family office, Pratithi Investments, and US-based 57 Stars LLC have backed the fund. New domestic investors include IIFL, the State Bank of India and Middle East-based NV Ventures LLP.

Majority members opposed to separate digital competition law: IAMAI president

Amid agitation from local tech companies regarding its views on competition and Big Tech, Internet and Mobile Association of India (IAMAI) president Subho Ray said an “overwhelming majority” of members are opposed to separate competition law for digital firms.

What’s in the letter? “One of the key features of the proposed new competition law is likely to be ex-ante regulations. This means even before you have become large or dominant, your company would be subject to the new provisions,” Ray wrote in the email to members, which we reviewed.

‘Mouthpiece for Big Tech’: We reported on Tuesday that Indian tech founders have opposed IAMAI’s draft views on the law, calling the body a “mouthpiece of Big Tech” due to a lack of “credence”, and are also demanding a change in its leadership.

Last Friday, we reported IAMAI had flagged observations made in a December 2022 report of the Parliamentary Standing Committee on Finance on anticompetitive practices by tech majors. Sources had told us that startups planned to oppose these views.

ET Ecommerce Index

We’ve launched three indices – ET Ecommerce, ET Ecommerce Profitable, and ET Ecommerce Non-Profitable – to track the performance of recently listed tech firms. Here’s how they’ve fared so far.

App Store providers ‘disappointed’ over NCLAT ruling: legal experts

App store providers like IndusOS, Epic Games and PhonePe may need to rethink their strategies after Google got partial relief from the National Company Law Appellate Tribunal (NCLAT) in a recent verdict that set aside four of CCI’s 10 directives.

Setback for homegrown alternatives: Legal experts see the NCLAT verdict as a blow to homegrown app discovery platforms. Alternatives for Play Store on Android include IndusOS, now owned by PhonePe, BharOS by IIT Madras and Mobile Sewa by the government.

Tweet of the day

Fintech Worldpay to focus on large cross-border payments in India

Worldpay, a Florida-based global fintech player, is looking to expand its cross-border payments offerings in India to take Indian merchants global, Yvonne Szeto, vice president, commercial, for Worldpay told us.

Close eye on UPI: With around one-third of its 5,000-strong workforce in India, Worldpay is keeping a close track of the Unified Payments Interface (UPI) as an evolving payment mode. Szeto said UPI had emerged as the backbone of India’s digital payments transformation.

Bullish on BNPL: Buy now pay later (BNPL) has tapered a bit due to regulatory interventions but newer forms of offerings will emerge, Szeto said about its promise in India. Regulators worldwide are putting guardrails around the BNPL segment so consumers are not cheated by high-interest rates.

Other Top Stories by Our Reporters

Hypd raises $4 million funding from Orios, existing investors: Content commerce platform Hypd has raised $4 million in a pre-series A round from Orios Venture Partners.

Pocket FM secures $16 million in debt funding from Silicon Valley Bank: Audio series platform Pocket FM on Tuesday said it has secured $16 million in debt funding from US-based Silicon Valley Bank (SVB), now a division of First Citizens Bank.

A year on, ONDC clocks more than 11,000 retail orders per day: A year after launching the Open Network for Digital Commerce (ONDC) in Bengaluru on April 29, 2022, the network on Sunday (April 30, 2023) clocked 11,100 retail orders, its highest so far per day.

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