In what could be the beginning of the consolidation of mobile value added services companies, Mobile2Win, a leading VAS player, has been acquired by another VAS player, Chandigarh-based Altruist Group. As part of the all stock deal, the venture capital investors and promoters in Mobile2Win will pick up a 10% stake in Altruist, while M2W will become a subsidiary of Altruist.
Besides, the VCs and promoters will continue to hold a 10% stake in M2W post the deal, Anuj Aggarwal, co-founder and director of Altruist, told VCCircle. The venture capital investors of Mobile2Win will not be investing any additional money into Altruist. Mobile2Win MD and CEO Rajat Jain will join the Altruist Group board.
The deal will also make Altruist-M2W combination one of the largest VAS players in India. While Mobile2Win has revenues of Rs 35 crore, Altruist Group, which is a voice and web-based VAS provider, has revenues of Rs 165 crore.
Nexus India Capital and Norwest Venture Partners had invested $15 million in Mobile2Win in 2006. The company had also raised funding from Softbank China and Silicon Valley Bank. Nexus India also bought the stake in Mobile2Win from Rupert Murdoch promoted eVentures, which was one of the earliest investors in Mobile2Win.
"We have complementary strengths and skills across the mobile ecosystem. This consolidation will deliver over 40% incremental value to our shareholders," said Rajat Jain, MD & CEO of M2W. Avendus Capital was the exclusive financial advisor to Mobile2Win for the transaction.
Altruist Group was formed in 2005 by brothers Dheeraj and Anuj Aggarwal and has 12 offices in India. There are "perfect synergies" between two companies as they work in the same domain but in different platforms, said Aggarwal. Also Mobile2Win has a presence with all the operators, which attracted Altruist to the deal.
The companies also specialise in different areas of VAS space. Mobile2Win has a strong exposure in mobile marketing, SMS and WAP. Altruist has a presence in voice-based VAS services. These are branded and marketed by operators like Bharti Airtel, Tata Teleservices and Idea Cellular, who are also Altruist's clients.
Alstruist also provides BPO services to its customers in telecom space, but this contributes to only 5-6% of its revenues. The new entity is targeting a 20% share of mobile VAS market in India and revenues of around Rs 350 crore in FY09. The VAS market is dominated by few large players like Bharti Telesoft, OnMobile, Spice group's Cellebrum, and One97 Communications.