Investors face potential financial losses as Bluestone reduces its IPO valuation, causing concerns among stakeholders
Headline: Bluestone's IPO Valuation Falls Short, Late-Stage Investors Potentially Face Losses
In the bustling world of jewellery companies, Bluestone, backed by Accel, has recently announced its initial public offering (IPO). However, the company's IPO valuation of around Rs 7,800 crore has raised concerns for some late-stage investors who joined the cap table within the last year. This valuation is lower than the valuation in the last private funding round, which stood at Rs 8,100 crore in August 2024, indicating a down round.
This down round implies a markdown on recent investments, potentially leading to paper losses for these late-stage investors. In contrast, early-stage investors who hold shares sold in the IPO’s offer-for-sale (OFS) portion may realize some gains or at least partial liquidity at the IPO valuation. However, they are also exposed to risks from the company’s continued losses and high leverage, with a reported loss of Rs 2,218 crore in FY25 and a net debt-to-equity ratio of 0.66.
The IPO share price band is set at Rs 492-517, and the IPO saw a 2.72x subscription. Yet, it only saw a flat or marginal grey market premium (~0.19%), indicating limited immediate upside. Moreover, Bluestone's losses have been increasing fiscal year over fiscal year, with the loss increasing from Rs 1,422 crore in FY24 to Rs 2,218 crore in FY25, despite adjusted EBITDA improvements.
Early-stage investors participating in the OFS may get liquidity but comparably lower return multiples given the down round and valuation discount to the last private round. This situation highlights the risk-reward dynamics at play, with late-stage investors deploying capital at higher valuations within the last year potentially facing losses, while early-stage investors selling in the IPO have partly mitigated risk by exiting at the IPO price but may still face valuation compression compared to earlier expectations.
Meanwhile, Tata Sons has backed Tata Capital, which has filed for its IPO, and is expected to receive a $16-billion tag. The International Finance Corporation (IFC) is set for a bonanza with Tata Capital's IPO. In another development, Renee Cosmetics has received funding in its Series C round, with Playbook Partners leading the investment.
However, the exact dates or timelines for Tata Capital's IPO, Bluestone's IPO, or the Series C funding round of Renee Cosmetics are not specified in the reports. Furthermore, the reasons for the IPO valuation adjustment at Bluestone and the specific details about the potential losses faced by late-stage investors remain undisclosed.
Financial losses might be incurred by late-stage investors in Bluestone, due to the IPO valuation falling short of their expectations and the company's reported losses. On the other hand, early-stage investors who partook in the IPO's offer-for-sale could potentially gain some liquidity, but at comparably lower return multiples given the down round and valuation discount to the last private round.
