Infibeam seeks up to Rs450 crore in first e-commerce IPO in India
Ahmedabad-based e-tailer has fixed the price band at Rs360-432 per share and the public issue will close on 23 March
Infibeam Inc. Ltd said on Tuesday that it will launch its initial public offer (IPO) on 21 March to raise about Rs.450 crore, making it the first e-commerce firm to be publicly traded on Indian stock exchanges.
The Ahmedabad-based company has fixed the price band at Rs.360-432 per share and the public issue will close on 23 March.
Match-making website Bharat Matrimony is another e-commerce company that is working toward a stock exchange listing. The capital markets regulator cleared its IPO plan in December.
Infibeam filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India on 30 June 2015; it was approved in early October.
The firm, which competes with large e-commerce platforms such as Flipkart, Snapdeal and Amazon, aims to use the IPO proceeds to set up a cloud data centre, shift its registered and corporate office, set up 75 logistics centres, buy software and for general corporate purposes, according to the DRHP.
The company will allot at least 75% of shares on a proportionate basis to qualified institutional buyers (QIBs), 15% to non-institutional investors comprising high net-worth individuals (HNIs) and 10% of shares will be reserved for retail investors.
The anchor investors’ offer will open on 18 March and will comprise 60% of the total shares reserved for QIBs. An anchor investor is a QIB who makes an application for a value of Rs.10 crore or more. The volume and value of such a subscription often serves as an indicator of the company’s reputation.
Infibeam initially hired four investment bankers—SBI Capital Markets Ltd, ICICI Securities Ltd, Kotak Mahindra Capital Co. Ltd and Elara Capital Ltd—to manage the IPO, according to the DRHP. But the latest share sale documents now states that Kotak Mahindra Capital and ICICI Securities have opted out. The firm did not give a reason.
Infibeam, founded by former Amazon executive Vishal Mehta, turned profitable in the first six months of 2015-16, according to the share sale documents.
Infibeam’s promoters include the high net-worth family that runs Infinium Motors Pvt. Ltd, a channel partner of Toyota Kirloskar Motors. The company’s top shareholders include Vishal Mehta: 14.05%; Infinium Motors Pvt. Ltd: 12.43%; Ajit Mehta (father of Vishal Mehta and chairman Infinium Motors Pvt. Ltd): 7.06%; and Jayshree Mehta (mother of Vishal Mehta): 7.06%.
Infibeam Inc. has many businesses including e-commerce marketplace Infibeam.com, Buildabazaar, an e-commerce enabling services provider, and a domains business .ooo.
According to industry sources, the company currently gets a major chunk of its revenue from the Buildabazaar platform.
The company posted revenue of Rs.171.3 crore and a net profit of Rs.6.6 crore for the six months ended September 2015, according to the share sale documents. It reported revenue of Rs.288.2 crore at a net loss of Rs.9.8 crore for the year ended March 2015.
Investor sentiment towards IPOs remains positive due to the rally in stock markets, said experts. But there is a caveat: investors need to understand the business models of e-commerce firms before investing.
Many investors don’t know the business models of these firms; most of them are funded by private equity players who expect these firms to become the Amazons and Alibabas of the world, said Prithvi Haldea, founder chairman of Prime Database Group, a firm that monitors primary market.
“It is a high-risk, high-reward situation, and investors with deep pockets and willingness to take risk should invest in such companies. Unless e-commerce companies have a sustainable revenue-generating model, gaining success will be difficult especially when solely relying on heavy discounting or predatory pricing approach. One has to understand that it took years for large, present-day e-commerce companies several years to reach where they are today. Not everyone can become that,” he said.
Besides Infibeam, two more firms have announced plans to launch IPOs this week.
Oncology chain Healthcare Global Ltd will start its IPO on Wednesday (16 March) to raise Rs.650 crore, while Mumbai-based Bharat Wire Ropes Ltd will launch its three-day IPO on 18 March to raise up to Rs.70 crore.
Nearly 30 firms have received Sebi’s approval for IPO but are yet to do so, according to data available on the regulator’s website. Collectively, these firms plan to raise almost $2 billion (about Rs.13,000 crore) through their share sales.
On 7 March, Mint reported that six-seven firms, including GVR Infra Projects Ltd, Centre For Sight Ltd, L&T Infotech Ltd, dairy firm Parag Milk Foods Ltd, and Maini Precision Products Ltd, were preparing to launch their IPOs in March and April, after taking note of the post-budget rally in stock market.
Small finance bank licence holder Equitas Holdings Ltd is aiming to tap primary markets early next month, Mint reported on March 15.
The Sensex has risen 6.73% since the budget on 29 February. The 30-share gauge had dropped 11.4% since 1 January till the budget.
So far this calendar, three companies have raised Rs.1,285.12 crore through IPOs, shows data by Prime Database.
In 2015, 21 companies raised Rs.13,614 crore by selling shares to the public for the first time, according to capital market data provider Prime Database.
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