Amagi debut erodes Accel's gains in reluctant stake sale

Global venture capital firm Accel’s paper gains in Amagi Media Labs Ltd declined after the cloud software company’s shares listed at a 12% discount to the offer price on Wednesday, as the broader market fell on renewed global trade concerns.

Given the choice, Accel would not have sold anything in the initial public offering (IPO), two of its partners told Mint.

“It's a phenomenal software company, with close to 70% gross margin. From an actual perspective, if there was an opportunity for Accel to not sell and hold for a very long time, that would have been great," said Shekhar Kirani, partner at Accel.

"We sold whatever minimum amount that we had to, to meet regulatory guidelines to make the IPO happen," Rachit Parekh, another partner at the firm, said.

Accel, which first invested in Amagi in 2021, sold equity through its Accel India VI (Mauritius) Fund. This fund saw its paper gains narrow to 2.9x at the listing price, down from 3.3x gains projected at the upper end of the price band.

Amagi declined on its market debut amid a broader market selloff after US President Donald Trump’s threat to impose new tariffs on European allies over Greenland reignited global trade war concerns. India's benchmark Nifty50 was trading 0.3% lower on Wednesday afternoon, extending losses for a third straight session.

Accel sold 50.7 lakh shares, which at the listing price made the stake sale worth around ₹161 crore. Accel holds 1.76 crore shares of the company after the IPO. Premji Invest, Avataar Ventures, and Norwest Venture Partners also sold shares in the IPO.

Amagi, a cloud-based broadcast and streaming technology firm, downsized its offer earlier this month to a valuation of $869 million, down from the $1.4 billion it achieved in 2022. Amagi trimmed the fresh equity raise to ₹816 crore from ₹1,020 crore, and Accel's growth fund and Avataar Ventures' first fund dropped out of the offer-for-sale.

Accel told Mint that its reduced stake sale was not driven by the valuation crunch, but by its long-term conviction in the company.

The offer garnered over 30x demand overall, generating bids for 82.4 crore shares against 2.72 crore on offer during the subscription period from 13 to 16 January, according to NSE data.

The quota for non-institutional investors fetched 37.36 times subscription, while the category for qualified institutional buyers was subscribed 33.77 times. Retail individual investors bid for 9.31 times the shares allocated to the category.

Beyond Amagi, Kirani said that many companies in Accel's India portfolio have achieved the scale to go public. Among these, Infra.Market has already filed confidentially for an IPO, while Zetwerk and Acko are preparing for listings, he said, without specifying timelines or valuations.

While Accel's seed-to-IPO timeline for its portfolio companies has changed over time, Parekh said it varies from company to company.

"There are some companies that can go faster, some which will take more time,” he said. “It depends on the market dynamics at play. If our seed investments can go public in 10 years, we would be very happy with that."