Tracxn IPO: Some cheer amid a dull IPO market

Analysts
were concerned about the initial public offering (IPO)’s high valuations, less-than-record subscription numbers, and the issue being entirely an offer for sale (OFS).

The difference between an IPO and OFS is simple. A company raises fresh funds from the primary market through an IPO, whereas in an OFS there is no new raising of funds as existing shareholders dilute their stake through the primary market and keep the money raised.

Since it was an OFS, the amount received — Rs 309.38 crore — will go to the selling shareholders (promoters and investors). While Flipkart founders Sachin Bansal and Binny Bansal exited the company, the promoter shareholding of Abhishek Goyal and Neha Singh dropped below 35% after the issue.

The IPO was open for subscription between October 10 and October 12. The company sold 38,672,208 equity shares via the OFS route in the range of Rs 75-80 per share.

Company’s performance

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Tracxn Technologies, founded in 2013, provides market intelligence data to private companies. The company has an asset-light business model and operates a SaaS-based platform named Tracxn.

The company’s extensive global database and its customised solutions and features allow its customers to source and track companies across sectors and geographies. It has become one of the most prominent players in the private market data service provider space.

For the fiscal year 2021, the company clocked total revenue of Rs 55.74 crore, down from Rs 63.13 crore a year earlier.

In FY22, it had posted a loss of Rs 4.8 crore, against a loss of Rs 5.3 crore in FY21 and a loss of Rs 5.4 crore in FY20.

Challenging IPO market

The overall IPO market — both domestic and global — has been going through a lull since the beginning of the year, marking a reversal of last year’s trend, when there was an IPO boom. Numerous startups, including Zomato, Nykaa and Paytm, had jumped on the bandwagon last year to try their luck in the primary market.

Nykaa had a blockbuster market listing, but Paytm and Zomato had a disappointing debut. Indeed, both have seen a significant erosion of shareholder wealth over the last six-nine months.

Companies are
putting their IPO plans on hold as market sentiments have turned volatile in the face of global macroeconomic headwinds, record-high inflation levels, and the escalating war between Russia and Ukraine. Investors are jittery, and have become cautious with their bets, seeking quick profitability rather than taking risks.

In such a scenario, Tracxn’s market listing is expected to bring some cheer to retail investors.

The steady listing could also see an IPO revival during the second half of the fiscal year, as data from Prime Database suggests that 71 companies have proposed to raise about Rs 1,05,000 crore, and have received approval from the Securities and Exchange Board of India (Sebi) to go ahead.