Mumbai-based Just Dial Ltd, which runs an India-specific local business listings site Justdial, has pushed back its proposed initial public offering (IPO) and raised Rs 327 crore ($57 million) in one of the largest ever pre-IPO round of VC funding. The money has been raised from existing investors Sequoia Capital and SAP Ventures.
While Sequoia Capital brought in Rs 305 crore, SAP Ventures invested Rs 22 crore in the latest round of funding. Sequoia’s current investment in the company would be among the single largest investment commitments by the VC firm in India. It invests in early-stage startups, as well as growth capital deals almost akin to a mid-market private equity investor.
This fundraising by Just Dial would delay what was set to be the largest public issue by an Indian company in the consumer Internet business.
The proposed IPO had a mix of primary issue and secondary component where private investors SAIF Partners, Tiger Global Management and Sequoia Capital India, as well as the company’s promoter VSS Mani, were to sell some shares. The delay in the public issue means the investors would have to sit longer to partly encash their investments in the company.
Just Dial’s founder and CEO VSS Mani told VCCircle: "We got extraordinary response for our IPO roadshow. We got over 40 investor interest from Singapore, Hong Kong, USA as well as India. When we were back, our existing investors Sequoia and SAP wanted to put in fresh money rather than diluting their stakes."
He said the company is now looking at an IPO in the first quarter of 2013 and would refile its DRHP with market regulator SEBI to go ahead with the IPO, which would only have a secondary component with some existing financial investors selling shares of the company.
The company was planning to use the proceeds from the fresh issue in the IPO to expand organically. It has plans to deepen its presence in the 11 largest cities in India and also expand beyond them. It also plans to add new products besides investing in brand building.
According to its DRHP filed last August, Just Dial plans to spend as much as Rs 101.3 crore towards brand building through advertising campaigns and celebrity endorsements, and a similar amount would be used for upgrading existing hardware and procuring new hardware. Around Rs 51 crore was to be used to establish new offices in Mumbai, Delhi, Bangalore, Chennai, Pune, Coimbatore, Jaipur and Chandigarh.
Just Dial uses platforms like phone, Web, WAP and SMS to connect buyers and sellers across product categories.
According to sources, the company has struck the latest deal at a pre-money valuation of Rs 3,200 crore and post money valuation of around Rs 3,500 crore as was proposed in the upcoming IPO (more on that here). But now, the company would be hoping to push it further with the new valuation hook.
Market regulator SEBI had approved the DRHP of Just Dial Ltd a couple of months ago. Citigroup Global Markets India and Morgan Stanley India were the book running lead managers to the issue.
With the total issue size expected over Rs 700 crore including the fresh issue of Rs 360 crore, Just Dial’s IPO was to be the largest public offering by an Indian Internet company. In 2010, online travel portal MakeMyTrip had listed on the NASDAQ, raising Rs 326 crore.
Info Edge (India) Ltd, which owns websites like Naukri.com, raised Rs 174 crore through its IPO in 2006. IntraSoft Technologies, another smaller firm in the digital domain that owns 123greetings.com, raised Rs 53.65 crore in its listing in 2010.
With the proposed IPO now expected to have only the secondary sale of shares by existing investors, it remains to be seen whether it would be bigger than that of MakeMyTrip.
Just Dial’s fresh round of funding comes within a month of a large deal related to another Internet-related services firm. Last month, Quikr Mauritius Holding Pvt Ltd, the parent company of Quikr India Pvt Ltd that runs the online classifieds site Quikr, raised $32 million in its fifth and also its largest round of funding, led by the private equity firm Warburg Pincus.
Existing investors Matrix Partners India, Norwest Venture Partners and eBay Inc also participated in the latest round that took the total funding into the company to $50 million or close to Rs 260 crore – making it one of the heavily funded consumer Internet firms in India.