Wakefit files for ₹468cr IPO; investors eye bumper exit
What's the story
Wakefit Innovations, a Bengaluru-based start-up known for its direct-to-consumer (D2C) mattresses and home solutions, has filed draft papers for an initial public offering (IPO). The proposed IPO comprises a fresh issue of shares worth ₹468.2 crore and an offer for sale (OFS) of up to 5.83 crore shares by early investors and founders. The company plans to use the primary proceeds to strengthen its offline presence and invest in brand building.
Investor details
Major stakeholders looking to partially cash out
Wakefit's early institutional backers are using this IPO as an opportunity to partially cash out. Peak XV Partners (formerly Sequoia Capital India), which invested in 2018, plans to offload up to 2.5 crore shares. Belgian investment firm Verlinvest is looking to sell 1.02 crore shares. Co-founders Ankit Garg and Chaitanya Ramalingegowda will also reduce their stakes by selling 77.3 lakh and 44.5 lakh shares, respectively.
Financial gains
Founders to take away astronomical returns
The IPO is expected to give Wakefit founders astronomical returns on their share acquisition cost. Given their nominal share acquisition costs—₹0.02 per share for Garg and ₹0.04 for Ramalingegowda—the IPO promises staggering returns for both. Garg's exit value is 4,393 times that of Investcorp and 4,134 times Verlinvest's. Ramalingegowda's gains are similar. Peak XV's exit value is also significantly higher at 4.3 times Investcorp's and four times Verlinvest's.
Fund allocation
Company plans to open 118 new stores
Wakefit plans to use ₹82.15 crore from the IPO proceeds to open 118 new company-owned stores, including a large-format "jumbo" outlet. This will take its offline store count to 216. Another ₹145.19 crore is earmarked for paying rent and licensing fees across its existing 98 stores over four years. The company has also planned a pre-IPO placement of up to ₹93.64 crore which will reduce the fresh issue size accordingly if executed successfully.
Financial overview
Revenue up 21% in FY24, loss reduced significantly
In FY24, Wakefit reported an operating revenue of ₹986 crore, a 21% increase from ₹812.6 crore in FY23. The company also managed to significantly reduce its net loss from ₹145.6 crore in FY23 to just ₹15 crore in FY24. However, profitability is still a work in progress as for the nine months ending December (FY25), it reported a net loss of ₹8.8 crore due to aggressive offline retail expansion plans.