“We don’t want to take decisions based on share price, but we do want to ensure steady compounding of equity so that retail investors who think long-term and come on the journey, see value,” Ramalingegowda told ET in an interaction.
His comments come amid a muted stock market debut for the Bengaluru-based company on Monday, with Wakefit’s shares closing at Rs 190.6 on the National Stock Exchange (NSE), 2.2% below its issue price of Rs 195. The company currently has a market capitalisation of Rs 6,231 crore.
At the closing price on debut day, the company’s founders and early investors saw a reduction in their paper gains compared to earlier projections when the IPO price band of Rs 185-195 was announced.
Cofounders Ankit Garg and Ramalingegowda hold 28.7% and 8.06% stake, respectively, in the company following the listing, valued at about Rs 1,820 crore and Rs 509 crore at the current market price. In comparison, at the IPO price, their holdings were valued at around Rs 1,861 crore and Rs 521 crore.
Garg and Ramalingegowda also made around Rs 151 crore and Rs 87 crore, respectively, from the offer-for-sale (OFS) portion of the IPO. Garg, who owns about 103 million shares, sold around eight million, while Ramalingegowda offloaded four million of his 31 million shares.
Peak XV Partners, Wakefit’s largest shareholder after Garg, holds 13.8% stake and is sitting on approximately 9.3X paper gains on its investment, compared with about 11X at the time the IPO price band was announced. The venture capital firm trimmed its OFS to two crore shares from 2.5 crore, receiving around Rs 400 crore, while its remaining stake is valued at about Rs 873 crore.
“The time to take a company public is when you have more predictability over your next few quarters. You can see a clear operating leverage as your company continues to compound and scale. Over the last many quarters, Wakefit founders have seen a lot of those characteristics play out in their business,” said Sakshi Chopra, managing director at Peak XV Partners.
According to Chopra, Mamaearth was the first to list from the fund’s portfolio, followed by Wakefit. It is expecting a few more consumer-focussed companies to go public next year.
Among other selling shareholders, Verlinvest’s stake is valued at about Rs 290 crore, representing a 2.3X paper gain, while SIG Asia VC and Korean investor Paramark hold stake worth about Rs 307 crore and Rs 49 crore, respectively.
Elevation Capital, which now owns 4.41% of Wakefit, did not sell any shares through the OFS. Its holding is currently valued at about Rs 279 crore.
Founded in 2016, the company initially focussed on sleep-related products such as mattresses, pillows, and bed frames, before expanding into a broader home portfolio including sofas, dining sets, wardrobes, study tables, and bookshelves. Currently, mattresses comprise about 60% of its revenues.
As outlined in its IPO papers, Wakefit plans to open 117 company-owned, company-operated (COCO) stores over the next couple of years, expanding beyond the 40-50 cities it currently operates in. The company is also planning its first Ikea-sized `jumbo store’ in Bengaluru.
Wakefit will also deploy Rs 15-20 crore on improving and expanding its manufacturing facilities.
On the stock’s performance, Ramalingegowda declined to comment, calling price movements “completely out of our control”. Instead, he said the listing brings added responsibility. “As a B2C company, being listed helps customers connect more with the brand, but it is also a responsibility because so many retail investors have put in their savings,” he said.