Also in this letter:
- Govt may rethink safe harbour rules for social media firms
- Agritech startup Bijak in talks to raise $35 million
- Zostel asks Sebi to suspend Oyo‘s $1.2-billion IPO
Paytm IPO draws interest from Alkeon Capital and others
Paytm founder Vijay Shekhar Sharma
Last week we reported that Paytm was in talks with Canada’s CPPIB, Abu Dhabi Investment Authority, Singapore’s GIC and BlackRock to join its initial public offering (IPO) as anchor investors.
US funds: Now, the IPO has grabbed the attention of a set of new investors, including US-based asset manager Alkeon Capital, and funds managed by Morgan Stanley and Goldman Sachs, sources told us.
- “Alkeon is in talks with Paytm and is looking to pick up shares through anchor allotment as well as during the IPO. While the valuation has yet to be finalised, they are garnering strong interest from institutional investors from the United States and Europe,” a source said.
European funds: Funds from Europe have also shown interest in Paytm’s $2.2 billion IPO, which has been billed as one of the largest public issues in India in more than a decade.
- “Some European funds that were looking to invest in Ant Group’s IPO, which was later scrapped by the Chinese government, have also held talks with Paytm owing to the digital payments boom in India,” the source added.
IPO status: Paytm’s IPO is being seen as the next big moment for the startup ecosystem after Zomato debuted on the bourses in July. Sources said Paytm is expecting Sebi’s final approval soon and is racing to be a publicly listed company before Diwali, which falls on November 4.
Ongoing conversations with investors indicate it will seek a valuation of $20-24 billion. It was last valued at $16 billion after it raised $1 billion from investors such as T Rowe Price, SoftBank and Ant Group in November 2019.
The IPO is split evenly between fresh shares and a secondary share sale. Paytm founder Vijay Shekhar Sharma, SoftBank, Ant Group and Elevation Capital are listed as selling shareholders, who will sell a part of their holding in the company in the OFS.
Paytm’s draft red herring prospectus had said 75% of its public issue will be earmarked for qualified institutional buyers (QIBs), while 15% is for non-institutional investors and the balance 10% for retail investors. Up to 60% of the QIB portion may be allotted to anchor investors.
Govt may rethink safe harbour protections for social media firms
India is considering a rethink of its safe harbour rules, which protect social media companies from liability for what users post on their platforms.
Why now? This comes at a time when calls to further regulate Facebook have intensified around the world following revelations by whistleblower Frances Haugen.
Senior officials told us the government is watching the situation evolve and thinks the “blanket exemption” given to social media companies has to go.
“The platforms have to be accountable for the content. They can’t shield behind the safe harbour [rules]. They have to be much more proactive in identifying and removing harmful and hateful content,” an official said.
“There is a need for legislation in this area and the government is already thinking on these lines. Be it in Europe or America, all are having a rethink on the safe harbour provision and we also think that it has to be modified,” the official added.
What about IT rules? The new IT rules address some concerns around flagging and removing content and also establish a grievance redressal mechanism, but it seems the government is considering a bigger revamp. That would involve changes to the Information Technology Act, 2000, which was last amended in 2008, long before smartphones became mainstream in India. The safe harbour protections are listed under Section 79 of the IT Act.
What’s happening elsewhere: Facebook’s vice president of global affairs, Nick Clegg, told CNN on Sunday that the company was open to changing the US version of India’s safe harbour rules, which date back to 1996.
Other governments are also mulling new regulations to curb hate speech and harmful content online. Leaders of France and New Zealand will also hold discussions with major global tech firms at a summit in Paris on Wednesday.
Also Read: Frances Haugen and the power of one
Tweet of the day
Agritech startup Bijak in advanced talks to raise $35 million
Bijak, an agritech startup backed by Sequoia Capital’s Surge fund, is in advanced talks to raise $35 million in a round led by Bertelsmann India, sources told us.
Valuation jump: The round would value the two-year-old startup at $200-$250 million, they said. Bijak had raised $12 million in a Series A funding round in April last year from investors led by Russian venture capital firm RTP Global, at a valuation of $85-$90 million.
The startup also counts Omidyar Network, Omnivore Partners and Better Capital among its investors.
Funding boom: This latest funding comes at a time when agritech startups are seeing heightened interest from the investor community. Almost $172 million has flowed into the sector across 21 deals so far this year, shows data from Venture Intelligence. In 2020, more than 20 agritech startups cumulatively raised more than $125 million across equity, venture debt and conventional debt rounds.
Other deals news
■ Content platform Graphy has announced the acquisition of edtech platform Spayee for $25 million. An Unacademy group company, Graphy helps creators grow their audience, monetise their skills and host live cohort-based courses.
■ ReshaMandi, a business-to-business marketplace focused on silk products, has landed $30 million in Series A funding led by Creation Investments. The equity-plus-debt round saw participation from Omnivore, which led the seed round of ReshaMandi, 9 Unicorns, Venture Catalysts, Sandeep Singhal of Nexus, and IndiaMART founder Brijesh Agarwal, among others.
■ Health tech startup Docprime, a subsidiary of Policybazaar parent PB Fintech, said it has invested $7.5 million in AI-driven telehealth and wellness platform Visit Health as part of its Series A funding round.
Genrobotic Innovations to work with UK, Malaysia, South Korea
(From left to right) Arun George, Vimal Govind, Rashid K and Nikhil NP, cofounders, Genrobotic Innovations
Genrobotic Innovations, which bagged the top honours under the Social Enterprise category at the ET Startup Awards 2021, is planning to work with the UK, Malaysian and South Korean governments to deploy its cleantech and medical solutions.
Vimal Govind MK, its cofounder and CEO, spoke to us about what drives the company to focus on manual scavenging and how it plans to leverage technology to solve pressing social issues.
Here are some excerpts from the interview:
How many states have adopted Bandicoot?
Bandicoot is in action in 14 states. Our mission is to change manholes to roboholes and rehabilitate sanitation workers into skilled Bandicoot operators. We want to provide better and safer methods using robotics and AI technology to people working in extreme and unsafe environments. We primarily focus on designing and developing robotic solutions to address the most relevant social issues.
Also Read: Colleges must push entrepreneurship culture: FamPay founders
Are you looking to expand your footprint?
We have set up an office in the UK and are looking to collaborate with the government there as well as in Malaysia and South Korea for our cleantech and medical solutions robots. Our robots are also attracting interest from South American countries and being used in refineries in Nigeria.
Also Read: Startups going public will turn profitable in three years, says Sanjeev Bikhchandani
How important is the social welfare aspect in your business model?
We are a group of socially committed innovators. Our robotic solutions Bandicoot, G-Gaiter (which is a robotic gait training platform for rehabilitation of paraplegic patients) set examples for our commitment towards society. All our innovations are rooted to sort out various human difficulties and empower people to lead a life of harmony. We have rental and revenue sharing business models that give beneficiaries affordable access to the technology.
Read the full interview here.
Also Read: India ahead of global fintech in having more women leaders, says Lizzie Chapman
Zostel asks Sebi to reject and suspend Oyo’s $1.2-billion IPO
Zostel (Zo Rooms) has written to markets regulator the Securities and Exchange Board of India, requesting it to reject Oyo’s draft red herring prospectus (DRHP) and suspend its proposed initial public offering (IPO). ET has reviewed a copy of the letter.
We first reported Zostel’s plan to move Sebi on October 4, saying it had firmed up plans to ask the regulator to restrict Oyo’s $1.2-billion IPO, citing its ongoing legal dispute with the Gurgaon-based firm.
What the letter said: Zostel said Oyo’s IPO is “non-maintainable as Oravel’s capital structure is not final”. Accordingly, Oravel’s filing of the DRHP in the circumstances, is illegal, in view of the stipulation contained under Regulation 5(2) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations).”
- “The DRHP is replete with material omissions and blatant misstatements, intended to mislead the public into investing into Oravel’s shares without appreciation of the risk involved,” it said.
Interestingly, Zostel’s note includes a presentation by Oyo promoter SoftBank, which in an earnings report in 2016 mentioned that Oyo had acquired Zostel.
Catch up quick: The issue dates back to 2015, when the two companies signed a contract for Oyo to acquire Zostel. The deal fell through, but Zostel said that it still deserved about 7% in Oyo’s parent firm Oravel Stays.
A Supreme Court-appointed arbitrator said in March that the term sheet between Oyo and Zo was binding and that Oyo, after a point, stopped taking steps to fulfil obligations under it.
It said Zo was “entitled” to make “appropriate proceedings”. Since the dispute landed in court, Oyo has maintained the said term sheet was non-binding and challenged the arbitrator’s order.
Pause Google’s Play Store policy changes, industry body urges CCI
The Alliance of Digital India Foundation (ADIF), an industry body, has asked the Competition Commission of India (CCI) to put on hold Google’s planned changes to its Play Store payments policy until the competition regulator completes an ongoing probe into Google’s alleged abuse of its app market dominance. ADIF represents the interests of various stakeholders such as startups, app developers and others.
It said it would support the ongoing inquiry, which the CCI announced in November 2020, but was compelled to petition the commission for interim relief to protect the choice of app developers.
What changes? The policy changes, which were originally meant to take effect in October 2021, will be introduced in India in April 2022. They will, among other things, require developers of certain types of apps to use Google’s own billing service, called Google Billing System (GBS), to accept payments. GBS charges a 30% commission on all Play Store transactions.
Google has previously said the rule applies to paid apps and those that offer in-app purchases, which comprise less than 3% of apps on Google Play.
Yes, but: ADIF said the issue wasn’t just about money. In its petition to the CCI, it said Google’s 30% commission was extremely high and unfair. However, it said that the core issue was the mandatory imposition of the GB and the exclusion of other methods of payment.
- “The matter is not as much about the percentage of commission charged as it is about the anti-competitive practice of forcing a payment option and forcing out other payment providers,” said Murugavel Janakiraman, founder and CEO of Matrimony.com.
ADIF said it had a strong case for seeking such relief as Google’s policy changes would have a “destructive effect” on the operating margins of many startups and make their business models infeasible.
Google’s policy tweak: In September 2020, Google had said it would no longer allow apps to bypass its payments system. It announced the move as a “clarification” of what its existing policy already was.
“We’ve always required developers who distribute their apps on Play to use Google Play’s billing system if they offer in-app purchases of digital goods, and pay a service fee from a percentage of the purchase. To be clear, this policy is only applicable to less than 3% of developers with apps on Google Play. We only collect a service fee if the developer charges users to download their app or they sell in-app digital items, and we think that is fair.”
Google said it would implement this rule in October 2021 but deferred it to April 2022 in India after more than 150 startups and companies here protested against the move. This prompted the CCI to launch an investigation into Google the following month. It said the Play Store policy was “prima facie” unfair as it restricted the choice of app developers.
Report in another probe leaked: In September, we reported that the CCI’s investigative arm—in a separate probe—had found Google guilty of using anti-competitive, unfair and restrictive trade practices in the mobile operating system and related markets. That investigation began in April 2019.
A few days later, Google filed a writ petition in the Delhi high court against CCI over the leaked report, saying, “We are deeply concerned that the director general’s (DG’s) report, which contains our confidential information in an ongoing case, was leaked to the media while in the CCI’s custody. Protecting confidential information is fundamental to any governmental investigation, and we are pursuing our legal right to seek redress and prevent any further unlawful disclosures.”
But when the CCI told the court on September 27 that it was not behind the leak, the high court dismissed Google’s plea.
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