Grofers Explores Merger With Cantor Fitzgerald’s SPAC For IPO

Grofers Explores Merger With Cantor Fitzgerald’s SPAC For Nasdaq Listing

SUMMARY

A blank check firm or special purpose acquisition company is a development stage firm with a business plan centred around a merger or acquisition with another company

The SPAC route would make sense for Grofers, as it would help the loss-making online grocer raise funds for the IPO, and possibly list in India later

In FY20, Grofers saw its net loss increase by 42% to INR 637.49 Cr

SoftBank-backed online grocery seller Grofers is expected to raise $400-$500 Mn through a public listing on Nasdaq by merging with New York-based Cantor Fitzgerald’s blank-check firm.

According to a report by Economic Times, Grofers is looking to raise this money at a valuation of $1 Bn.

A blank check firm also called a special purpose acquisition company (SPAC), is a development stage company with a business plan centred around a merger or acquisition with another company.

Anshu Jain, the India-born former co-chief executive of Deutsche Bank, is the president of Cantor Fitzgerald.

The SPAC route would make sense for Grofers, as it would help the loss-making online grocery seller raise funds for the IPO, and possibly list in India later.

In the fiscal year ended March 31, 2020 (FY20), Grofers’ revenue grew 111% year-on-year (YoY) to INR 176.79 Cr. But its expenses also increased by 53% to INR INR 814.29 Cr. Thus, the company saw its net loss grow 42% to INR 637.49 Cr.

Last month, the company’s CEO Albinder Dhindsa said Grofers was eyeing acquisitions in the ecommerce technology space to enhance the customer experience and help boost customer retention.

The company, which claims to have added over 5000 local store partners during the lockdown and subsequent months to meet the growing demand, also said it registered a 60% increase in its gross merchandise value (GMV), compared to pre-Covid-19 levels.

In November, it was reported that Grofers was in the final stages of raising $55-$60 Mn from its largest investor SoftBank Vision Fund and other existing investors.

Besides Grofers, other Indian startups such as Zomato, Delhivery, Droom, PolicyBazaar and Flipkart are also planning for IPOs this year. Since none of these startups has attained profitability, a foreign listing is the only viable option for them, as in India loss-making companies cannot raise money from retail investors directly. The stock market regulator has set strict rules for such companies if they want to get listed in India.