[YS Exclusive] SoftBank-backed OfBusiness taps bankers for $500M IPO next year

Ofbusiness, an online marketplace for construction materials and financing for small and medium enterprises, has initiated conversations with investment bankers as the SoftBank-backed firm targets a public listing by August next year.

The company, which also counts Falcon Edge (Alpha Wave Global), Tiger Global, and Norwest Venture Partners among others as its backers, has held exploratory talks with at least five investment banks including Kotak Investment Banking for its initial public offering (IPO), two people aware of the matter told YourStory.

The issue, comprising a mix of primary and secondary share offerings, will be around $500 million, the people said.

The discussions are fairly at the early stages and the contours of the deal may change, the people added. Oxyzo Financial Services, the lending arm of OfBusiness, in which it holds over a 70% stake, will also look to list separately but not immediately, according to the people. 

OfBusiness declined to comment. Detailed questions sent to Kotak Investment Banking did not elicit any response.

“The market is looking up, there’s more interest for India globally, particularly for manufacturing and the negativity around these new-age companies has also gone down and the recent batch of IPOs shows it,” said one of the people, requesting anonymity.

“Infra.Market and OfBusiness have both started exploratory talks and my guess is both companies will be looking to list at the same. Although a final timeline has not been decided yet, realistically the IPOs should happen by August or so next year,” the person added.

The companies' move to start exploring talks with investment bankers comes at a time when three new-age tech companies–Ola Electric, Unicommerce and FirstCry–got listed on India’s stock exchanges and made strong listing gains. Ola Electric and FirstCry, which decided to slash their valuations for the IPO, also managed to surpass their last private market valuations, thanks to the listing gains they made.

“The sector that we are seeing, the valuation might be slightly lower than what we are expecting, and 12 months is a big time frame to decide the valuation, especially when we have US elections and possible rate cuts,” said the person quoted above.

“It is safe to assume that there is a margin of discount rather than a margin of a premium at this point. If you have come in the last round of the fundraise, you are not likely to make more than 10% in the listing,” the person added.

OfBusiness, founded in 2015 by husband-wife duo Ashish Mohapatra and Ruchi Kalra, along with Vasant Sridhar, Nitin Jain, Srinath Ramakkrushnan and Bhuvan Gupta, has been one of India’s most profitable unicorns and has made a net profit for the previous five fiscal years.

In FY23, which is the latest available data, OfBusiness made a profit of Rs 463.3 crore, which more than doubled from its FY22 profit of Rs 201.1 crore. OfBusiness also doubled its revenue to over Rs 15,300 crore, making it one of the rare technology unicorns—startups valued at over $1 billion—that showcases strong revenue growth alongside robust profitability.

Oxyzo, OfBusiness’ lending arm, which was hived off as a separate entity in 2016, raised its first round of external funding of $201 million from Alpha Wave, Tiger Global and Norwest Venture Partners among others, became a unicorn, getting valued at over a billion dollars.

The company, which counts Mohapatra, Kalra and Gupta as its co-founders, is also profitable and reported a profit of nearly Rs 200 crore on a revenue of Rs 570 crore in FY23.

OfBusiness also becomes the latest SoftBank-backed company to eye a potential IPO after six of the Japanese investors’ portfolio companies have been listed since 2021. SoftBank, which lost over $540 million in fintech giant Paytm, made almost as much by exiting PB Fintech and Zomato.

While the Japanese investor is sitting on over 100% gains in the last three companies that went public—Ola Electric, Unicommerce and FirstCry—SoftBank can only start selling stakes once the lock-in period ends after six months to actually start generating a profit. SoftBank sold shares worth $170 million in the IPOs of the three companies.