Info Edge spreads its start-up investments
Latest `12.8 crore investment increases its stake in Zomato.com to 48.5%
Premium(Info Edge India runs the jeevansathi.com matrimonial classifieds website.)
New Delhi/Chennai: Info Edge India Ltd, the owner of the country’s largest jobs website Naukri.com, has over the past three years invested at least 200 crore in 7-8 unrelated Internet companies—the latest being its top-up investment of 12.8 crore in Zomato Media Pvt. Ltd to increase its stake in the online restaurant guide to 48.5%.
“We see a lot of potential in the consumer Internet space, with only 120 million Internet users currently," said Hitesh Oberoi, managing director and chief executive of Info Edge.
The company, he added, has almost 500 crore and will look at more such investments in either its portfolio companies or new ones. “We are cash rich and our internal business doesn’t need all the cash we generate, so we can invest in new businesses..."
Info Edge’s businesses are in the form of classifieds for real estate (99acres.com), matrimony (Jeevansathi.com), education (Shiksha.com) and jobs; only Naukri.com is profitable.
Among the companies Info Edge has invested in are fashion flash sale website 99labels.com, deals portal mydala.com, online insurance firm PolicyBazaar.com, education content Meritnation.com, digital photography firm canvera.com, content start-up Floost.com, apart from Zomato.com.
Sandeep Muthangi, analyst with brokerage IIFL (India Infoline Ltd) and who tracks Info Edge, said the Internet business model is still nascent in India and it is difficult to predict what will work. “The biggest risk in this sector is technology disruption and so they (Info Edge) are making it (their portfolio) as diversified as possible."
Though there is a lot of risk involved, the strategy of investing in diversified businesses is probably the best use of cash on the company’s books, he added.
“Even if two of the investments made by the company click, it will make good the rest of the investments that may not do well," added another analyst, who did not want to be identified.
Oberoi said Info Edge’s investments are strategic in nature and the company is open to owning a majority shareholding in its portfolio firms but only if the promoters agree to that.
Analysts say the company has multiple options to sell its investments. The portfolio companies are small now but “could acquire the scale and go public after a few years", said the unnamed analyst cited above.
Another analyst, who also did not want to be identified, said Info Edge could drive a huge leverage by either absorbing some profitable ventures from among its portfolio firms into its fold or selling its stake in these companies to private equity or other investors at higher valuations.
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