Upcoming IPOs: Swiggy, Lenskart, FirstCry Forge Ahead, Backed by SoftBank.

IPO

Amidst a dynamic investment landscape, SoftBank’s portfolio stands strong, collectively valued at a staggering $42 billion. The conglomerate’s noteworthy investments encompass a diverse range of enterprises, including the renowned Indian food-delivery titan Swiggy, eyewear brand Lenskart, the versatile omni-channel retailer FirstCry, and the enterprising business-to-business commerce startup OfBusiness. These entities are currently making strategic strides toward their impending initial public offerings (IPOs), with insightful guidance from Navneet Govil, the esteemed Executive Managing Partner and CFO of SoftBank Vision Fund.

Unveiling the Future: IPO Preparations

As the IPO horizon beckons, these ambitious startups are strategically positioned at varying stages of readiness. An intriguing development arises as FirstCry sets its sights on filing its draft IPO papers by the conclusion of 2023, as revealed by Govil in an enlightening interview with ET on a Tuesday.

Amidst the recent backdrop of SoftBank’s quarterly performance disclosure, Govil also disclosed a remarkable statistic – a resounding 93% of SoftBank’s extensive portfolio, comprising an impressive 473 firms, boasts a highly favorable positive cash runway of over 12 months. This commendable resilience arises amidst a broader market correction that has reverberated through the global technology sphere, leading to significant recalibrations and streamlining across various sectors.

Strategic Prowess and Vision

With SoftBank’s Vision Fund transitioning from a series of consecutive quarters marked by losses to achieving profitability, the conglomerate is poised to re-enter the investment arena with renewed vigor. Despite incurring a $3 billion net loss for the group, the Vision Fund is steadfast in its commitment to proactive investments, marking a departure from a prolonged period of relative inactivity.

Govil elaborates on this pivotal transition, stating, “We have two-thirds of the portfolio that’s already generating cash or will be generating cash without the need for incremental capital… One-fourth of the portfolio is showing top-line growth of more than 50% while 40% of the portfolio clocked top-line growth of more than 25% in this market…” These impressive figures reflect the diversified and robust nature of SoftBank’s portfolio, reflecting a blend of stability and dynamic growth.

Navigating Challenges and Capitalizing on Opportunities

SoftBank’s journey has been punctuated by both successes and challenges. The conglomerate’s proactive investments during the 2021 boom period bore witness to a shifting landscape, as several portfolio firms encountered setbacks, and some even met their demise. Notably, SoftBank’s ongoing legal battle against former IRL CEO Abraham Shafi underscores the conglomerate’s commitment to protecting its investments and asserting accountability.

IPO

Govil acknowledges the shifting tides, affirming, “The companies that aren’t going to do well are those that have already been identified and have been written down, quite significantly.”

Eyes on the Future: IPO Prospects and Beyond

One of the most anticipated upcoming IPOs within SoftBank’s realm is Arm Ltd., the British chipmaker. This venture aims to secure a valuation ranging between $60 billion and $70 billion, with an IPO targeted for September, as reported by Bloomberg News.

Regarding SoftBank’s strategies for monetization and exit strategies from publicly listed portfolio companies in India, Govil provides insights. Once these ventures go public, SoftBank envisions a gradual sale of shares to optimize monetization. Govil cites the instance of Uber, where SoftBank achieved a remarkable $7.7 billion return on its investments, having completed a full exit.

SoftBank’s prowess in maneuvering its holdings is exemplified by the recent sale of a portion of its Lenskart shares during a $600 million funding round, highlighting the success of secondary share sales. Furthermore, negotiations are underway to potentially dilute SoftBank’s stake in FirstCry through a pre-IPO transaction, reflecting the conglomerate’s proactive approach to optimizing its holdings.

The Journey Continues: Investment Philosophy

In the ever-evolving realm of technology and innovation, SoftBank’s investment philosophy remains unwavering. Govil emphasizes the conglomerate’s commitment to seeking out cutting-edge opportunities, particularly within artificial intelligence-focused companies, spanning regions including India, Europe, Latin America, and the US. However, Govil underscores that investments will adhere to a high bar, reflecting SoftBank’s discerning approach.

IPO

As Govil concludes, “We don’t have targets specific to regions, but the SoftBank group has over $40 billion of cash on its balance sheet. In Vision Fund-II, we have $60 billion of commitments and we’ve only invested $51.5 billion. So, there’s $8.5 billion that’s available to invest.”

For the June quarter, SoftBank’s deployment of approximately $1.9 billion across SoftBank and the Vision Fund indicates a strategic pivot. Although this figure exceeds the allocations of previous quarters, it notably falls short of the levels observed in previous years. Govil’s assertion that SoftBank is poised to invest when the right opportunities align underscores the conglomerate’s commitment to forging ahead, capitalizing on disruptive innovation, and shaping the technological landscape of the future.

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