Just Dial gets board approval to raise FII limit to 75%

Mumbai-based Just Dial Ltd, which runs the online business directory, has obtained its board of directors’ approval to increase the limit of foreign institutional investors and foreign portfolio investors in the company to 75 per cent from the current 49 per cent, according to a stock market disclosure.  FII holding in the company stood at 25.54 per cent as of June 30, 2014. The proposal is, however, subject to approval from shareholders. 

The move certainly raises hopes of a large investment by an overseas investor in the company. This development comes against the backdrop of huge investor interest in e-commerce and large fundraises at high valuations commanded by high potential yet unprofitable e-commerce firms. Recently, Flipkart—the largest e-commerce firm in India—raised $1 billion in a fresh funding round from investors including Tiger Global, Naspers, Accel Partners, DST Global, ICONIQ Capital, Morgan Stanley Investment Management and Sofina, which according to some media reports, valued the firm at $7 billion.

The board of the company has also approved acquisition of Just Dial Inc from Just Dial Global Private Limited, subject to necessary approvals.

Earlier this month, Just Dial had said that it is planning to augment its reach to the UK and United Arab Emirates. It also has plans to enter the Southeast Asia market.

The company also said that it is planning to integrate micro payment solutions with its transaction-related services or search plus services.

It currently enables purchases of 20 such services online and says it is aggregating for 145,000 merchants on its platform, including grocery stores, medical stores and doctor appointments as well as facilitating table bookings and food delivery from restaurants.

It is also looking to start domestic and international air ticketing, which could be significant addition in terms of value of services sold through its platform.

As of March 31, 2014, the company’s database consisted of around 11.8 million listings compared with 9.1 million as of March 31 last year, representing a y-o-y growth of 30 per cent.

Rikesh Parikh, VP (markets strategy and equities) at Motilal Oswal Securities, said: “Just Dial could have increased its FII to up to what RBI has allowed. There are a few PEs, which are initial investors in the company, looking to exit. So there doesn’t seem to be any problem on the limit side.” 

“It is also not going to make much impact. The company has only indicated that going forward, it would look to expand its services into other countries. So this move could be an enabler for them to raise money in future," he added. 

On Thursday, shares of Just Dial were trading at Rs 1,746.90 per share at 2:45 PM (IST) down 1.61 per cent from their previous close on Bombay Stock Exchange.

(Edited by Joby Puthuparampil Johnson)

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