Imagine Marketing, the holding company of electronics and lifestyle brand Boat, one of India’s few hardware startups, has filed for an IPO worth up to $266 million.
In its DRHP filing with the local regulator on Thursday, Boat, backed by Warburg Pincus, said it planned to issue new shares worth around $120 million and offer for sale the shares of worth $146 million. South Lake Investment, one of Boat’s backers, plans to sell shares worth $106.4 million in the IPO, according to the filing.
The startup, which was valued at $300 million during its Series B a year ago, said it plans to use the IPO process to pay past debts or “prepay” current debts . It’s looking for a valuation of $1.5 billion or more in the IPO, according to one of its investors, who requested anonymity to share private business. (The valuation sought has already been reported by local media.)
Boat “manufactures” and sells a range of electronic products such as headphones, fitness wearables, smart watches, game controllers, charging cables, portable batteries, headphones and other mobile accessories. The cheap and high-end aesthetic offerings of these devices have helped it woo young people, who make up the majority of its customer base.
The boat has grown in several categories in recent years and has followed the same strategy that made it stand out in the first place. His fitness wearable starts under $25, AirPod-like smartwatches and headphones under $30, charging cables $3, home theater soundbars around $50, speakers without wire at just over $10, headphones at $5.50.
In the filing, Boat said it relies on a number of contract manufacturers to produce its products, including those in the audio, wearable, personal care and other categories.
“We rely on these contractors to manufacture our products, and our contractors, in turn, rely on third-party suppliers for many of the components used in our products. For the financial years 2019, 2020 and 2021 and the six-month period ended September 30, 2021, ₹1,160.92 million ($15.4 million), ₹3,408.33 million ($45.3 million), ₹7,176.18 million (US$95 million) and ₹9,910.81 million (US$131.8 million). ), or 57.79%, 69.34%, 57.19% and 60.73% of our stock-in-trade purchases were made from five of our most used suppliers, respectively,” he said. he said, adding that a potential geopolitical tension between India and China could affect the startup’s business.
Boat’s heavy reliance on third-party marketplaces Amazon and Flipkart to sell its wares is also potentially concerning. “Our primary sales channel is through online marketplaces, and for fiscal years 2019, 2020 and 2021 and the six-month period ended September 30, 2021, 85.11%, 86.26%, 85.84% and 83.24% of our operating revenue came from online marketplaces, and 78.59%, 81.35%, 83.72% and 75.02% of our operating revenue came from our two main marketplaces respectively online,” he said in the filing.
“Our agreements with our two main online marketplaces are on a non-exclusive basis. For a few customers, as part of our contracts with them, we are obligated to buy back or provide additional price support on unsold products after a certain period of time. »
According to marketing research firm IDC, Boat held more than 30% of the wearables market in India and was the fifth-largest global brand in the category at the start of last year.
The startup’s IPO could prove to be a test for the local public market, which has plunged in recent days as investors around the world fret over rising interest rates in the United States and its implications for technology stocks. Shares of four Indian tech startups – Zomato, Paytm, Nykaa and PolicyBazaar – that went public last year have fallen in the past two weeks.