Infibeam Incorporation Ltd has earned the distinction of becoming the first Indian ecommerce firm to launch an initial public offering (IPO). But will it be able to earn the distinction of successfully carrying through the issue and raising the desired INR 450 Cr? Looking at the data of first day’s share sale, it appears that Infibeam’s ambitions might be thwarted by its steep valuation, especially at a time when the ecommerce sector is facing headwinds in the form of drying up of funds, marked-down valuations, and the fierce competition.
As per NSE’s data till 1700 hrs yesterday, the issue received bids for 26,44,792 shares as against the total issue size of 1,25,00,000 shares. This means that the INR 450 Cr. issue was undersubscribed at a measly 21% on the opening day. Investors’ disinterest in the issue is clearly visible from the low subscription percentages. The portion set aside for qualified institutional buyers (QIBs) was subscribed 22% and non-institutional investors received 21% subscription. Retail investors’ category was subscribed 17%. The company has fixed the price band at INR 360-432 per equity share for the IPO, which will conclude on March 23.
Founded in 2007 by Vishal Mehta, Sachin Dalal and Neeru Sharma, Gujarat-based Infibeam’s business can be divided into two parts- first the ecommerce website Infibeam.com which has more than 5,000 registered merchants and about 7.8 million active users as of December 31, 2015. And second is their services business BuildaBazar (BaB) provides customisable digital solutions and other value added services to enable merchants to set up online storefronts. Infibeam competes with Flipkart, Amazon and Snapdeal, among others in the ecommerce space.
Infibeam plans to use INR 235 Cr out of the IPO proceeds to set up a cloud data centre and purchase property to shift the registered and corporate office(Ahmedabad). It also wants to use INR 67 Cr to purchase software and INR 38 Cr for setting up 75 logistics centres. The IPO will also add to the INR 70 Cr worth cash it already has on its books.