Oyo pre-files DRHP with Sebi, IPO size likely slashed; Unacademy leadership to take salary cuts of up to 25%

Also in this letter:
■ Unacademy leadership to take salary cuts of up to 25%
■ Digit Insurance re-files IPO papers after regulator concerns
■ Building Instamart has taken a toll on me: Karthik Gurumurthy

Oyo pre-files DRHP with Sebi; IPO size likely slashed to $400-600 million

Oravel Stays, which operates budget hospitality chain Oyo, has pre-filed its Draft Red Herring Prospectus (DRHP) with stock market regulator Sebi on Friday under the confidential pre-filing route.

IPO size slashed: Sources close to the company said the issue size has likely been reduced to $ 400-600 million all of which will be a primary issuance of shares to repay most of its debt.

What is a confidential pre-filing? Introduced by Sebi in November last year, under this route, the filing is available at the initial stage only to the regulator. The new option provides companies greater flexibility on the issue size during the initial stage. This route also allows companies to change primary issue size by 50% till the updated DRHP stage.

As per the provisions, the pre-filed DRHP will not be available in the public domain, but can be used for interaction with qualified institutions buyers for limited marketing of an IPO. Unlike the traditional route where companies have to launch the IPO within 12 months from the Sebi approval, or final observation; in the confidential filing, an IPO can be floated within 18 months from the date of filing.

‘Some leeway’: A source close to the company said the market continues to be highly volatile globally and to a certain extent, in India as well. ” Filing through the confidential route will give Oyo some leeway on the timing of the listing, as well as on fine-tuning the issue size, basis the market conditions, to between $400 to 600 million, all of which will now be a primary issuance, to repay most of its debt. For now, an issue timing of around Diwali is likely once Sebi approves,” the person said.

Unacademy leadership to take salary cuts of up to 25%

A day after cutting 12% of its workforce, Unacademy on Friday said the edtech firm’s leadership will take permanent salary cuts extending up to 25%. In a memo to employees, cofounder and CEO Gaurav Munjal told employees that the Bengaluru-based unicorn’s leadership including founders will take these cuts.

Quote, unquote: “The salary cut will depend on the current salary of the leader, their scope and performance… These cuts are permanent and the salaries will only be revised in April 2024,” Munjal added.

CEO on fresh layoffs: On Thursday, Munjal had told employees that Unacademy had taken “every step in the right direction” to make its core business profitable, but the efforts had not been enough. He had just informed the team about a 12% layoff exercise.

Cost cutting continues: SoftBank- and General Atlantic-backed Unacademy is under pressure to cut down on its monthly cash burn. Last month, the company had cancelled appraisals for the financial year ended March 2023 to focus on turning profitable, amid an overall tightening in funding and a slump in demand for online education.

The edtech company has been slashing its workforce over multiple rounds of job cuts for a year now in its attempt to turn profitable. It had fired around 1,000 contractual and full-time employees in April 2022. However, in early November, the company culled as many as 350 roles, impacting about 10% of employees across the group.

Digit Insurance re-files IPO papers after regulator concerns

Go Digit Insurance has resubmitted draft papers for an initial public offering (IPO) valued at $440 million, after taking measures to address concerns related to the company’s employee stock plans, which had caused a delay in the offering for several months at the behest of the market regulator.

IPO details: The offering comprises a fresh issue of shares worth Rs 1,250 crore ($152.1 million) and an offer for sale of 109.4 million shares, according to its draft perspective.

What are the concerns? Listing plans of the insurer backed by Canadian billionaire Prem Watsa’s Fairfax Group and TVS Capital Funds, were stalled after Sebi restarted its review because of compliance issues related to share issuance. In January this year Sebi found issues related to employee stock appreciation rights. Such rights enable employees to receive a bonus equivalent to rise in company’s stock over a certain period of time. This is prohibited under regulations for companies going public.

Building Instamart has taken a toll on me: Karthik Gurumurthy

Karthik Gurumurthy, who is stepping down as the head of Swiggy’s quick commerce venture Instamart, as ET reported on March 31, said building the business ground up since 2020, has taken a toll on him. Gurumurthy shared his thoughts in a LinkedIn post.

‘Already profitable’: Gurumurthy in his post mentioned that some of Instamart’s dark stores are already profitable. The service has more than 300 dark stores across the country. “Today business continues to grow, great relationship with our brand partners and with few our stores already being profitable, it just feels how the seed germinated into a sampling [sic] and now a big strong tree,” Gurumurthy said in his LinkedIn post.

Quote unquote: “I have loved being a part of this journey but this journey has been arduous with a lot of compromises on physical and mental wellbeing.I plan to take a sabbatical now to come back afresh and build something (0-1), something which I have loved,” Gurumurthy said in his post.

Phani Kishan Addepalli to take over: Swiggy’s cofounder Phani Kishan Addepalli is slated to take over as the head of Instamart, ET reported on Friday. Addepalli has been with the food and hyperlocal delivery platform since 2015 and has been the CEO of its subscription-based milk and grocery delivery service Supr Daily. He was promoted as cofounder in 2021, a year after cofounder and chief technology officer Rahul Jaimini left the company.

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ETtech Deals Digest

Amid the ongoing funding winter, investment in Indian startups managed to cross the $1 billion dollar mark in March, on the back of late-stage funding in eyewear seller Lenskart and Walmart-owned fintech PhonePe.

The total funding for startups this month stood at $1.14 billion across 102 rounds, according to data provided by market intelligence firm Tracxn. This represents a 74% slump in funding on a year-on-year basis compared to $4.48 billion raised by startups across 378 rounds in March 2022.

Compared to February, startups raised 38% more against $832 million that they picked up across 89 rounds.

Late-stage funding, made up 75% of the total funding and stood at $858 million, led by the Abu Dhabi Investment Authority (ADIA) $500 million investment in Lenskart, valuing the company at $4.2 billion.

Walmart-owned PhonePe also picked up $200 million from its parent company in an ongoing fundraise, boosting the funding numbers for the month.

Here is a list of companies which raised the most amount of funds this month:

Today’s ETtech Top 5 newsletter was curated by Erick Massey in New Delhi and Siddharth Sharma in Bengaluru. Graphics and illustrations by Rahul Awasthi.