Audio entertainment startup Pocket FM is holding preliminary discussions to relocate its parent corporate entity back to India. The technology firm currently maintains a holding structure in the United States. This structural relocation process, known as a reverse flip, is part of the long-term plans of the company to launch an IPO.
Further, this introduces extra tax obligations and restructuring costs with standard public launch expenses. However, recent amendments to Indian company law in 2024 have simplified this transition. The new rules allow certain foreign parent firms to merge directly into their fully owned local subsidiaries without seeking approval from the National Company Law Tribunal. Despite this relaxation, the startup will still require official clearances under the Foreign Exchange Management Act and from the Reserve Bank of India.
With this corporate rearrangement, Pocket FM joins a growing list of major tech startups that are executing reverse flips before going public, including e-commerce firm Zepto and financial tech provider Pine Labs. At the same time, competition in the local mobile-first storytelling market is growing. Rival platform Kuku FM, which is operated by Mebigo Labs, has already taken a formal step toward the public market by confidentially filing its draft prospectus with the market regulator for a 3,500 crore INR initial public offering that targets a valuation of 15,000 crore INR.
The audio streaming firm is also negotiating a fresh private funding round to raise approximately 150 million USD from private market participants. Previous talks with global investment firms like Prosus and the Abu Dhabi Investment Authority did not lead to a final agreement. Private market buyers are currently demanding deeper corporate disclosures regarding content creation expenses, user retention habits, customer acquisition cycles, and the overall quality of operational revenue.
The digital content provider had previously secured 103 million USD during a Series D funding round in March 2024, which was led by Lightspeed and supported by the StepStone Group. That round pushed the total funding raised by the firm to 196 million USD and valued the startup at 750 million USD. In terms of business scale, the firm announced in March 2024 that its annualized revenue run rate had crossed 150 million USD. The United States emerged as its single largest marketplace by contributing 100 million USD to that total, while India remained one of its top two operational markets.
The company is pursuing this public market listing following a series of internal structural changes. The business recently went through a transition with its Chief Financial Officer, downsized its core workforce by 100 permanent jobs, and moved nearly 2,000 contractual workers onto the third-party payroll of Quess Corp.
Disclaimer: This news story is for informational purposes only and does not contain stock market investment advice.
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