BackJust Dial IPO gets subscribed 12 times
Just Dial plans to raise up to `950 crore and offered the shares in a price band of `470-543 a piece
Premium(The public issue will see the sale of a 25.02% stake in Just Dial.)
Mumbai: Just Dial Ltd’s initial public offer (IPO) got bids for 12 times the number of shares offered in the sale as it closed on Wednesday.
The company received bids for 157.8 million shares against its issue size of 13.6 million shares. It launched the share sale on Monday with an aim to raise as much as ₹ 950 crore by selling a 25.02% stake in a price band of ₹ 470-543 apiece.
The retail portion of the IPO was oversubscribed three times, the company said in a release, adding that the portion for qualified institutional buyers was subscribed over 10 times while that for high-networth individuals (HNIs) got subscribed 22 times.
Just Dial is a local search service that gives users free contact information of local businesses over the phone, the Internet and mobile applications. Its business model is selling advertising space for all these formats. Its consolidated total revenue for fiscal 2012 was ₹ 277.02 crore.
A company typically gets listed two weeks after an IPO closes, and experts are forecasting smart gains for Just Dial investors when it lists on the exchanges. “The strong response is because it is a different kind of company that has come up with an IPO. Such companies tend to catch the fancy of investors and given the way it is subscribed, there could be some listing gains," said Sandip Sabharwal, head of portfolio management services at brokerage Prabhudas Lilladher Pvt. Ltd. “Apart from institutional investors, others could opt for an exit through listing gains," he said.
The company’s existing investors, including SAIF Partners, Tiger Global, Sequoia Capital and SAP Ventures, will sell a part of their holdings. Just Dial’s founders, including chief executive V.S.S. Mani and chief operating officer V. Krishnan, will also sell some shares.
Vaibhav Sanghavi, director of Ambit Investment Advisors Pvt. Ltd, said the IPO would undoubtedly “encourage more such entrepreneurs with new ideas to raise funds in the market".
“Globally, we have seen that companies with unique business models have attracted higher valuations," he said, adding the “downside protection clause, is unique and has attracted a lot of retail investor interest". Sanghavi was referring to the “safety net" provided to retail investors who are typically those who invest ₹ 200,000 or less in an issue.
The promoters said they will buy back a portion of the stocks if they underperform after listing. This would be apart from a discount of 10% to the floor price provided to retail investors. While a safety net is not compulsory, firms filing IPO applications are offering them in an effort to accelerate the approval process, especially if bankers have been unable to offer a satisfactory explanation on the pricing.
Just Dial’s share sale also saw strong interest from anchor investors.
In a release on Friday, the company said it had got more than ₹ 208 crore through the sale of shares to Goldman Sachs India Equity Fund, HSBC Bank (Mauritius) Ltd, Birla Sunlife Trustee Co. Pvt. Ltd, and Deutsche Securities Mauritius Ltd.
Just Dial is the second Internet company to go public in India after Info Edge (India) Ltd, which runs websites including job site Naukri.com. Info Edge went public in 2006 and raised ₹ 174 crore. Travel website MakeMyTrip went public in 2010, raising ₹ 326 crore on the Nasdaq.
Some media reports, meanwhile, have suggested that matchmaking firm Bharatmatrimony.com and online retailer HomeShop18 may look at raising funds from the public in future. However, experts rule out the likelihood of a flood of IPOs on the back of the Just Dial IPO, at least in the near-term.
“It (the strong interest ) is company specific, I don’t think there is any sign of revival in IPO market. There is less appetite for mid-cap companies—be it the secondary market or primary," said Sabharwal of Prabhudas Lilladher.
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