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Indias First E-commerce Company IPO – Infibeam eyes 450 crore

In a good news to tech savvy invstors, Gujarat based Infibeam Incorporation Ltd has filed its draft red herring prospectus with securities market regulator SEBI for its initial public offer to raise up to Rs 450 crore. Infibeam runs the and websites. Last year, Sony Music bought a 26 percent stake inIndent, the company’s digital entertainment arm.

This would make it the first pure-play e-commerce company in India to float an IPO and would test the investors’ appetite for the so called booming sector. E-commerce in India has absorbed billions of dollars in the past four-five years, much of it from foreign private equity and venture capital firms. But Infibeam happens to be an exception of not having tapped on to any significant private investor till now. It is promoted by a Gujarat-based high net-worth family whose business mainly focus on auto dealerships.

Company has been funded even so far primarily though it has several individual shareholders. The only outside equity funding has been with media house Bennett, Coleman & Co Ltd that bet around Rs 33 crore through ad-for-equity investment platform Brand Equity Treaties Ltd (BETL). BETL owns 1.8 per cent stake in the Infibeam. BETL also pitched in with Rs 2 crore of non-convertible debentures, which are outstanding as of now.

Infibeam would become one of the youngest companies to go public. Having started in 2010, it is among the youngest home-grown e-commerce ventures. Issue comprises fresh issue of shares to raise up to Rs 450 crore. The Infibeam said it would float at least 25 per cent of the equity in the IPO, which means it is looking at a valuation of as much as Rs 1,800 crore.

The company informed BSE that the bulk of the money it raises would be used to set up a cloud data centre and purchase of property for shifting and setting up of data centre and corporate office. The rest would be utilised for setting up 75 logistics centres, purchase of software and the rest for general corporate purposes. 

Started in 2010 by MIT graduate and former Amazon executive Vishal Mehta, with the backing of his business family, Infibeam is positioned as an integrated e-commerce player. It owns and operates the Infibeam BuildaBazaar (BaB) e-commerce marketplace, which provides cloud-based, modular and customisable digital solutions and other value-added services to enable merchants to set up online storefronts. It also operates, a multi-category e-retail website.

As of March 31, 2015, Infibeam had more than 15 million products across 40 categories. It has followed an asset-light inventory model and having turned into a marketplace, claims more than 4,000 registered merchants on the site comprising manufacturers, distributors, aggregators and retailers. As of March 31, 2015, it had more than 850 employees, mostly software engineers.

Lets wait and see how market is going to evaluate the valuations of Inibeam, which would be an eye opener to many of our sky valued e-commerce firms

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