Mumbai: Venture capital investors Sequoia Capital and SAP Ventures invested Rs 327 crore in Mumbai-based listings provider Just Dial Ltd, the largest investment by VCs in any Indian company till date.
This is the fifth time that Just Dial has raised money since its inception in 1996. Sequoia has invested Rs 305 crore in the latest round while SAP Ventures put in Rs 22 crore. This is Sequoia Capital’s third investment in Just Dial.
In August last year, Just Dial filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for its initial public offering or IPO, looking to raise Rs 360 crore and was supposed to go public this month.
However, “this (funding round) gives us the flexibility to list next year at a better valuation and no one has to grudgingly dilute stake,” V.S.S. Mani, Just Dial’s founder and chief executive told Mint, adding the deal was closed in 24 hours. He said the promoters and employees of Just Dial hold a 40% stake in the company.
A file photo of Just Dial CEO VSS Mani.
The company now plans to file a DRHP next month and is planning to go public in 2013.
“The IPO (initial public offering) next year will just be a liquidity event for our investors. The company is well-capitalized now,” said Mani.
Just Dial, which delivers services across the Web, phone and mobile Internet, has a database of about 7.8 million merchant listings, with over 12 million merchant ratings and reviews. “We will use the capital for innovation, building technology and invest in research and development (R&D). We want to acquire substantial technology companies,” said Mani.
“We believe Just Dial enjoys an unassailable market position in local search, developed through many years of fantastic execution,” said Shailendra Singh, managing director, Sequoia Capital India.
Just Dial had a total income of Rs 189.9 crore in fiscal 2011, up 41% over the previous year while the company’s profit after tax rose 55.3% to Rs 28.62 crore, according to the DRHP filing.
The local search/information engine space in India has generated strong interest among investors. Last month, Internet and mobile-based classifieds company Quikr Mauritius Holding Pvt. Ltd, the parent company of Quikr India Pvt. Ltd, raised $32 million (around Rs 176 crore) in its fifth and largest round of fund raising.
Global private equity firm Warburg Pincus Llc led the round, with existing investors Matrix Partners India, Norwest Venture Partners and eBay Inc. pooling in.
Other companies that have raised funding include Four Interactive Pvt. Ltd that runs Asklaila, Sulekha.com and OLX Inc.
An expert said the IPO market is volatile this year, and the funding round as well as the corpus involved is an indication of how the investors are keen on letting the company continue with its growth momentum and not let progress get hampered by lack of capital.
“They (VCs) are bridging the funding gap to keep the growth momentum on. Also, an IPO is time consuming for the management. The investors have sorted both issues in one go,” said Deepak Srinath, director of Bangalore-based boutique investment bank Viedea Capital Advisors Pvt. Ltd. “Sequoia is known for taking big bets on category leaders.”
According to a report by research firm SMC Global Securities Ltd, 17 IPOs have already been deferred this year. These share sales were aiming to raise up to Rs 5,928 crore in total. This is in addition to 29 companies that called-off their IPO plans in the 2011 calendar year.