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Indiamart To Raise Rs 100Cr Via PE Route

21 January, 2011

Indiamart Intermesh Limted, which owns Indiamart.com, a B2B marketplace, is on the road to raise close to Rs 100 crores or $20 million from private equity investors, sources close to the development told VCCircle. The internet company, which was founded in 1998, is understood to have received interest from several investors including Bessemer Venture Partners and Warburg Pincus, sources add.

Dinesh Aggarwal, Founder, Indiamart.com, declined to comment on the development. This will not be the first time that the company will raise institutional capital. In 2008, it raised $10 million for a 14% stake from Intel Capital India Technology Fund and $3.4 million for about 5% stake from Brand Equity Treaty Ltd (Times Private Treaties) in 2007. 

The company, which connects Indian suppliers to global buyers,  claims that it helps generate $1-billion worth of B2B sales annually for its members. It generates 500,000 business enquiries for its members every month, features over 10,00,000 suppliers in 50,000 product categories and has 50 offices across India. Essentially, it acts an “aggregator” that serves as a go-between. The Indiamart platform comprises of online B2B marketplace Indiamart.com, Indiamart Sourcing guides, international trade shows and promotion on internet.

The business model of Indiamart.com is comparable to the likes of  Alibaba.com, an e-commerce company that has established a global reputation as a major player in bringing buyers and sellers together in cyberspace or Global Sources in China and ECeurope, which is focused on Asian business, despite its name.

Generally, access to Indiamart’s portals comes free of charge. But users also can sign up for “premium” content. The company wants to be known more as a complete B2B media than a marketplace for SMEs (Small and Medium Enterprises) in India. 

Typically, firms like Indiamart have primary revenue streams (derived from charging customers for value-added services); secondary streams (subscription fees and listing fees); and tertiary revenue streams (advertising and fees for providing links to other sites). 

Sources add that the company has been growing at a CAGR of about 50-60% and aims to ramp up its growth to about 80%. Post Intel Capital funding, the company doubled its workforce and wants to raise funding to fund its expansion plans. The company wants to increase its customer base, invest into R&D, enhance its marketing operations and grow via the inorganic route. 

According to analysts, business models like Indiamart could fill a gaping market need. The need is accelerated in India where there are virtually no printed directories or electronic databases to bring buyers and sellers together.  Moreover, the company focuses on small and medium sized businesses rather than facilitating transactions between multinationals and big companies, which often have their own web-based systems for dealing with suppliers.

According to analysts, the next decade will bring massive growth in the Internet sector in India supported by highly favourable demographics, growing Internet-broadband penetration, launch of one of the world’s best 3G networks, growing middle class-income levels, noticeable pick-up in tech-gadget and mobile culture, and surge in home-grown Internet start-ups.


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Indiamart To Raise Rs 100Cr Via PE Route

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