E-commerce player Infibeam Incorporation has got approved from the Securities and Exchange Board of India (SEBI) to raise INR4.5 billion via an initial public offering (IPO). Infibeam would be the first company from e-commerce sector to get listed in the stock market. It had filed its draft red herring prospectus (DRHP) with SEBI on 30 June and will be launching its IPO after counseling with ICICI Securities, Kotak Mahindra Capital Co, SBI Capital Markets and Elara Capital as its bankers.
Usage of Funds
The Ahmedabad-based company plans to utilize the proceeds for setting up cloud data centre and shifting its registered office to Gujarat International Finance Tec-City (GIFT) in Gandhinagar. Doing so will allow the company better customer management and market analysis, more control over proprietary technology and customer info, ascertain top most confidentiality and security along with providing disaster recovery mechanism.
Out of the total amount, INR2.3 billion will be used for setting up of data centre, INR670 million will be streamlined for purchasing software, INR370 million for putting up logistics hubs and for general corporate purposes.
Founded by Vishal Mehta, Infibeam initiated its operations as an automobile portal in 2007 but subsequently ventured into online retailing of varied products. Currently, it provides e-commerce services through cloud to retailers for marketing their products through ‘buildabazaar.com’. It also functions an e-commerce marketplace via ‘dhamaal.com’. Sony owns 26% equity in Infibeam Digital Entertainment, a technology platform for music companies and smart phone manufacturers for trading.
Apart from being an e-commerce player, Infibeam also offers dot-triple (.OOO) domain for businesses as a substitute for dot-com (.COM).Among its other achievements is India’s first e-book reader ‘Pi’ in 2010 and its next version named ‘Pi2’. The company also introduced a media device known as Infibeam Phi. With a work force of over 1,300 personnel, Infibeam has offices in Ahmedabad, Mumbai, Bangalore and Delhi.
This year, Infibeam launched ShipDroid to serve small merchants across all courier partners with logistics services.
Losing money, just like peers
Absolutely no surprises here. Like most e-commerce players, Infibeam isn’t profitable yet. On the flipside, Infibeam has been able to register consistent top line growth which is in line with the exploding e-commerce market in India. Its nine-month revenues of FY2014/15 have already surpassed the top line in last FY. Profitability is still far for the company, but Infibeam appears to be getting a good grip on its costs as the latest data indicates. According to the draft prospectus filed with SEBI, Infibeam’s net loss for the nine month of FY 2015 stood at INR96 million compared with a loss of INR259 million in FY 2013/14.
What stands out with Infibeam is that it hardly makes headlines for raising funds from venture capital or private equity firms. Indeed, there are no marquee VC or PE names in its top 10 shareholders. As the e-commerce business is fast becoming a game of deep pockets, it is natural for Infibeam to tap the primary market.
While Infibeam IPO may be the first among e-commerce players, it will be quickly followed by Matrimony.com, if market conditions remain positive. Although not an e-commerce player, customer support software company Freshdesk is also in line to raise public funds.