There is a chance that the transfer of profits generated by the selling of stakes of stake Zomato or Policybazaar could result in sub-optimal investment decisions: Bikhchandani
My opinion is that if the business is able to sustain itself and is able to sustain itself, why not hang on for a time? However, nothing is written in stone, and ultimately, the board is the one who decides: Bikhchandani
Info Edge currently owns an 15.3 percent stake in Zomato as well as a 13.3 percent stake in Policybazaar
Info Edge’s founder and ace investor Sanjeev Bikhchandani , Info Edge’s founder and ace investor (August 12) stated that the company has currently not in any rush to dispose of its share in the foodtech giant Zomato and fintech giant Policybazaar. The Board of the company will make a final decision regarding the issue.
In the course of Info Edge’s earnings call Sanjeev said there’s a chance that the transfer of profits that result from selling a stakes on Zomato or Policybazaar could result in’sub-optimal investment choices.
“Typically the fund needs to issue its first cheques for three years prior to closing to the funds. Imagine we had to use INR 10,000 crore from both exits. This would entail investing in 300 companies that are early stage with an average check size of 10 crores,” Bikhchandani said.
He also stated that the board of directors of the company will be able to take a decision on issues related to the sale of shares from Zomato in addition to Policybazaar.
“If you decide to sell the stake, you’ll have only one-third of the amount. However, if you keep holding the stake, the stake could grow in the near future. If an enterprise has legs and is able to sustain itself, why not hang the stake for a time? But, nothing is written in stone , and ultimately, the board makes decisions on these things,” noted Sanjeev Bikhchandani.
Info Edge currently owns an 15.3 percent stake in Zomato and also owns an 13.3 percent share in Policybazaar.
The statements of Bikhchandani occur at a moment when Zomato is subject to a heightened selloff pressure due to market volatility and poor financial performance. The pressures heightened last month following the expiration of the lock-in time for investors in the pre-IPO phase of Zomato that saw major names like Uber and Moore sell their shares in the Gurugram-based company.
Zomato is also being investigated for the controversial acquisition of fast-commerce company Blinkit as part of an INR 4,4447 crore deal. There are concerns about the viability from Blinkit and its substantial cash burn have caused a dip in Zomato shares, even though the major foodtech company has issued numerous clarifications in order to calm investors.
Sanjeev Bikhchandani also addressed the concerns about new-age tech companies that allocate a huge amount employees stock ownership plans (ESOPs) for founders. “I believe it’s important to examine each situation individually and examine some of the issues. Was there any public disclosure about the ESOPs prior IPO? Another thing to consider is the case of founders being required to reduce too much of their shares, will they be able to get (enough incentives to last) 7 to 5-7 years to steer this ship?” The Info Edge founder claimed.
“If the dilution was the result of the company’s competitive raise, there might be a more positive opinion… perhaps an quantity (of ESOPs to founders) is justifiable… like 1-3 percentage from the total company. It is also important to determine whether the founder made the decision on his own or executive directors were on the board during the process,” he added.
This follows a few two days after Zomato granted 4.65 Cr shares in its 2021 and 2018 stock option plans to its employees. In contrast, 63.5 Lakh ESOPs were allotted under the scheme in 2018, 4.02 Cr shares were granted under the 2021 scheme.
in June Newsexposer reported Zomato spent INR 386.9 Cr on ESOPs given for CFO Deepinder Goyal in the second portion of FY22. Furthermore, ESOPs for CEO Akshant Goyal cost the company 3 crore and secretary of the company Sandhya Settia’s stock option profits amounted to INR 30 Lakh in the period between October and March of FY22.
Info Edge, on the other hand, disclosed an 85% year-on-year (YoY) increase in its consolidated net income up to 292.4 Cr for the initial trimester (Q1) in the fiscal year 2022-23. Operating revenue also increased by over 66% YoY to 547.2 Cr for the period ending in June 2022.