Prosus Eyes Indian IPOs: A Promising Future for Startups
Dutch investment group Prosus has recently expressed optimism about the potential for initial public offerings (IPOs) from its Indian portfolio, highlighting a robust pipeline of candidates that includes notable names such as Meesho, BlueStone, PayU, and Urban Company. These companies are anticipated to go public within the next 18 months, signaling a significant moment for both Prosus and the Indian startup ecosystem.
A Long-Term Commitment to India
Prosus CEO Fabricio Bloisi emphasized the company’s long-standing commitment to India during a recent earnings call. "We are very excited about India," he stated, reflecting on the group’s investment journey that began seven years ago, well before the country was widely recognized for its potential. Bloisi noted that the decision to prioritize India has proven to be a wise one, with Swiggy’s upcoming IPO marking just the beginning of what he believes will be a series of successful public offerings.
Significant Investments and Strategic Focus
In its half-yearly disclosures for H1FY25, Prosus revealed that it has invested over $8 billion in India, underscoring the market’s critical importance to the company. This substantial financial commitment is not limited to just a few companies; Prosus has around 30 investments in the country, with plans to take several more public, including Captain Fresh, Mintifi, Vastu Housing Finance, Mensa Brands, and Eruditus. This strategy showcases Prosus’s confidence in India’s evolving startup landscape and its potential for growth.
Expanding Financial Services
Prosus is also diversifying its investments within the financial services sector, having recently invested $80 million in Mintifi, a supply-chain financing company, and $100 million in Vastu Housing Finance. This expansion beyond PayU India indicates a strategic move to tap into the burgeoning financial services market in India, which is becoming increasingly vital as the country’s economy continues to grow.
Performance Insights: A Mixed Bag
While Prosus is optimistic about its Indian investments, the performance of its portfolio has been mixed. The company reported a -38% internal rate of return (IRR) for online pharmacy startup PharmEasy in the first half of this fiscal year, a stark contrast to the 23% IRR recorded by B2B e-commerce platform ElasticRun. Other companies like Swiggy and PayU India each achieved an IRR of 21%, while Meesho recorded a 20% IRR. Edtech startup Eruditus, despite being the only positive performer in Prosus’s ed-tech portfolio, generated a modest 14% return.
Challenges in the Market
PharmEasy’s struggles are particularly noteworthy, as the company has faced intense competition from rivals such as Tata 1mg and Reliance-owned Netmeds. Despite managing to reduce its losses to Rs 2,533 crore in FY24, PharmEasy’s revenue fell by 15% year-on-year to Rs 5,644 crore, highlighting the challenges it faces in regaining market share in a fiercely competitive landscape.
Looking Ahead: A Bright Future?
Despite the challenges, Prosus remains optimistic about the future of its Indian investments. Bloisi noted that the unique ecosystem in India allows its companies to support each other in growth, creating a fertile ground for value creation. With a strong pipeline of IPO candidates and a commitment to nurturing its portfolio, Prosus is poised to play a significant role in the next phase of India’s startup evolution.
In conclusion, as Prosus prepares for a series of IPOs from its Indian portfolio, the investment group’s long-term vision and strategic focus on the Indian market could yield significant returns. The coming months will be crucial for both Prosus and the startups it has backed, as they navigate the complexities of the market while striving for growth and profitability.