An overwhelming response to the recently concluded Makemytrip IPO has just made one of the firm's early backers reaffirm its faith in internet businesses.
SAIF Partners, one of the earlier investors in Makemytrip, will look at internet and mobile VAS as the central theme of its investments this year.
“We plan to make 4-5 investments in these sectors over the next 12 months,” Ravi Adusumalli, SAIF Partners, heading India investments told VCCircle in a telephonic interview.
India's largest online travel company MakeMyTrip Ltd (MMT) made a dream debut in Nasdaq on August 13, 2010. The company's market cap rose to $800 million on day one as its stock price zoomed 89% to close at $26.45. SAIF Partners made the first major round of fund infusion of $10 million five years ago when the travel services firm started its India operations. Post issue, SAIF Partners' 51.2% stake came down to 43.79%, making more than 10X on its investment in the company.
"We are very proud to be the first investors in Makemytrip. Deep and the management team have done a fantastic job of executing in a market that was quite crowded for a period of time now and will continue to pull away,” added Adusumalli.
The decade-old MakeMyTrip, which began its services targeting overseas-based Indians booking tickets for home, over the last five years became one of the top local players in the Indian e-commerce space.
Investor confidence in the space is expected to gain momentum as more and more such business models go the IPO way, providing a great exit opportunity for investors.
“I believe that with the success of Makemytrip and the pending IPO for Justdial, you will see more capital flow into the sector, “ added Adusumalli.
Local search firm Just Dial raised its first round of institutional funding of Rs 50 crore from SAIF Partners in 2006, which was followed by a Rs 77-crore investment by Tiger Global in 2007. SAIF and Tiger are the largest investors in Just Dial holding over 20% stake each. The 16-year-old company was founded by VSS Mani in 1994.
Apart from the success of these companies, the recent 3G and broadband wireless access (BWA) auctions, will enable the demand of these services, feels the investor.
“We believe that owing to the recent spectrum auctions, wireless broadband will soon become a reality. As such, businesses that have waited for this infrastructure to become real finally have a chance to flourish,” Adusumalli added.
Exits
SAIF Partners has slowly and steadily been making exits and also has a few exits on the radar. “Over the year, we have exited Sify, IL&FS Investsmart, Intelligroup, Thermax, Mindtree and now Makemytrip,” said Adusumalli.
Apart from Makemytrip’s IPO at NASDAQ, Intelligroup Inc. ( IT services firm) got acquired by NTT Data Corporation for about $200 million. It made an open market exit in Mindtree Ltd and Thermax Ltd in 2009. HSBC InvestDirect (India) Ltd., another portfolio company got acquired by HSBC Securities & Capital Markets India Pvt. Ltd, valuing the deal at $275.4 million in 2008.
Besides these, Adusumalli adds, “we anticipate that One97 and Justdial will go public over the next few months as well”. SAIF Partners holds around 40% stake in Mobile VAS firm One 97 Communications. The venture capital firm which has about $4 billion of assets under management has invested $20 million in Catmoss Retail Ltd, $25 million in Network 18 Media &Investments Ltd, $10 million in Amoha Education Pvt. Ltd, TV 18 Home shopping network Ltd and $115 million in National Stock Exchange of India among other investments.
