Asia-focused private equity firm SAIF Partners has increased its stake in One97 Communications by 10% even as the mobile value added services company prepares for its IPO. The PE firm has picked up stakes in a secondary transaction from Vijay Shekhar Sharma, the founder and managing director, and Peeyush Aggarwal.
SAIF Partners currently holds 41% in the company that will get diluted to 36.7% after conversion of preference shares owned by other financial investors before the IPO.
Around 7.5% stake in One97 was acquired from Aggarwal, while the rest was sold by Sharma earlier this year. The transactions were done at a valuation of between Rs 450 crore and Rs 500 crore. This is the same valuation of the last round, when Intel Capital and Silicon Valley Bank (SVB) had picked up stake in early 2009.
SAIF Partners had initially picked up stake in March 2007 for $6-7 million with SVB and invested another $2 million in December 2007. The current transaction to acquire around 10% stake has been done for an investment of around $10 million, taking its aggregate investment to
nearly $20 million.
Intel Capital does not own any shares as of now but after conversion of preference shares would hold 9.7% before IPO. SVB is hiking stake from 2.7% to 3.5% ahead of the IPO through the convertible preferenmce shares route.
One97, which is looking to raise Rs 120 crore from its maiden issue, plans to allocate a significant chunk of this amount towards its overseas expansion, said Sharma in a recent interview with VCCircle. The Noida-based firm has seen a good traction in its revenues from South Africa and also has overseas operations in South Asia.
“We will grow more than 100% year on year on the international revenues,” said Sharma. “India’s scale is unparalleled to anywhere in the world – when you can deliver here, you can deliver to any
country’s scale,” he added. With Indian telecom majors like Bharti Airtel giving a huge push in emerging markets like Africa, mobile VAS and platform services players could also look at these countries.
Besides emerging markets, One97 is also eyeing revenues from developed markets like Europe. “In developed geographies, companies are more challenged for profitability and they have to become more efficient. Business models which do not require them to invest much in the capex and bring benefits are happily acceptable,” said Sharma.
With the advent of 3G and the ongoing tariff war, Sharma feels that now the mobile VAS players will gain more importance.
One97 reported revenue of Rs 40.7 core in FY08, which doubled to Rs 81.4 crore in FY09. For the first three quarters of FY10 the company reported revenue of Rs 86.75 crore with a profit before tax of Rs 20.2 crore.