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Jayant Mundhra

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Dexter Capital Advisors • 6m

Why did Tata Play, Oyo & Swiggy go for confidential IPO filing? 😅😅 Last week, many mocked Swiggy for filing IPO papers with SEBI under the confidentiality route. They said, “Keep the IPO also private!” This made me realise, most people don’t even understand what the confidentiality route is all about. .. In Dec 2022, Tata Play Ltd became the first company to go for a confidential IPO filing. Sometime later, OYO followed suit. So, its clear, Swiggy is not the first one. Even Tatas have tasted this path. And the path offers two big benefits to any business looking to list. .. Firstly, since the year 2000, 35% of the companies which filed a DRHP for an IPO ended up not going ahead with the IPO plans. -> But, because they filed a public DRHP, the sensitive and competitive details about the business were exposed. And that’s a big negative, which the confidential filing route helps address -> If a company sees a remote possibility that it could choose to junk its IPO plans due to a bad market cycle or any other reason, the confidentiality route allows it to ensure that its sensitive and competitive details are not revealed to the competition .. The second big benefit? -> In ordinary cases, after the SEBI shares its observations on the DRHP, a company is allowed 12 months to do an IPO -> But, the confidentiality route allows a time of 18 months, which helps with better chances of timing the market cycles .. Taking into account the aforementioned two pointers, I personally don’t get why companies taking the confidentiality route are seen so negatively. As and when they finally go for an IPO, they shall anyway file a revised public DRHP. And in that time, the company gets to protect its sensitive info and data. That’s a big positive, the way I see it. What do you think? .. Meanwhile, one should ask here, why did no one go for a confidential DRHP filing until Dec 2022? The answer is that this option was passed by SEBI only in Nov 2022, merely days before Tata Play went for it. It has been practised in developed markets such as the UK, Canada and the US for a long time otherwise. Did you know this?

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