Edtech company PhysicsWallah, which raised additional capital from existing investor Westbridge, is expected to make a confidential filing for an initial public offering over the next three weeks, a person familiar with the company’s plans said.
PhysicsWallah did not immediately respond to a request for comment on Tuesday.
Confidential filings allow companies to keep sensitive information private for a longer duration and submit updated documents only closer to the actual share sale. It also allows them to approach investors with a uniform set of numbers after a regulatory nod and is especially useful for high-growth companies with financials that can change on a monthly or quarterly basis.
The ongoing market volatility is an additional reason for companies to opt for confidential filings, the person cited earlier said. The benchmark BSE Sensex has declined over 13% from a high of 85,978.25 on 27 September on persistent selling by foreign institutional investors.
“It allows them the flexibility to time their public offering when the IPO market window opens,” an investor said, asking to remain anonymous. “It is a good option for many startups now in light of the market volatility.”
However, confidential filings need a longer timeline to clear regulatory milestones, and there is the risk of the market turning after companies make their updated IPO papers public.
“There will be companies going for confidential filings for a variety of reasons and not necessarily to time the market,” said V Jayasankar, managing director – head equity capital markets and member of the board at Kotak Mahindra Capital Co.
Timeline delays
In any case, many companies that have already filed draft IPO papers or have received final regulatory approval are waiting for an optimal time to push ahead with their listing plans.
JSW Cement, which received regulatory approval last month, has paused its proposed IPO by a few months to wait for a better market window, a person familiar with the company’s plans said. JSW Cement did not immediately respond to a request for comment on Tuesday evening.
“IPO investors are treading cautiously. They are focusing on quality companies with pricing discipline. IPO pricing is being renegotiated to ensure listing gain. This is healthy for the issue and the markets,” said Umesh Agarwal, a fund manager at 360One Asset.
Market sentiment must change substantially to absorb the large IPO pipeline, Agarwal said. As of 31 January, 70 companies had filed draft red herring prospectuses (DRHPs) with the Securities and Exchange Board of India and were awaiting clearance, while 36 companies had their documents cleared, he added.
“Issuers have two choices – lower prices or deferred issues. It is better to focus on ensuring a deep anchor book and ensure that the high net worth individual and retail portions get well subscribed rather than be singularly focused on pricing. Listing gains bode well for the company’s performance post-listing,” Agarwal said.
More than two dozen startups are likely to go public in the coming months, Mint previously reported. These include potential billion-dollar issues by Groww, Lenskart and Zepto, and smaller ones by Ather Energy, BoAt, Bluestone, Captain Fresh, Fractal, Infra.market, Ofbusiness, PhysicsWallah, PayU, and Pine Labs.
“Timelines are getting stretched,” said Klaas Oskam, CEO of DC Advisory India. “The IPO window is still open for high-quality companies. But the bar for companies to pull off a listing is significantly higher and in cases where companies are going ahead with their public issues, the issue has to be priced more attractively.”
According to Oskam, companies that rely heavily on market momentum and retail and HNI participation will have a harder time going public.
“We therefore expect that more companies will stay private longer,” he added.
IPO-bound startups may have to review their issue sizes and valuations after US President Donald Trump’s decision to impose tariffs on various imports sent the equity markets into a tailspin, investment bankers told Mint earlier.
Jayasankar of Kotak said in January he expects about 50 companies to go public in 2025, looking to raise about $35 billion compared with $20 billion raised in IPOs last year.
