SAP Ventures Invests $10M In One97 Communications

Mobile Internet services company One97 Communications has raised third-round funding of $10 million from SAP Ventures, the corporate venture capital arm of the software-maker SAP AG. The new funding comes as the Noida-based company has dropped its plans for an IPO due to volatile markets and now seeks to become one of the more-consumer-focused players in India's mobile Internet space.

SAP Ventures, which has recently invested $10 million along with Sequoia in IPO-bound Just Dial, is the sole investor in the current round. The company has earlier raised funding from investors like SAIF Partners, Intel Capital and Silicon Valley Bank. One person familiar with the development said that One97's valuation during this round was nearly $300 million.

One97 aims to be the leading mobile Internet marketing and commerce player and intends to expand its operations in the emerging mobile markets. More than 450 million mobile users leveraged One97's mobile marketing and commerce platform for conducting transactions in August 2011, according to a statement.

"India is reaching an inflection point in terms of mobile Internet users and that creates an opportunity to develop a great commerce and marketing platform, which is where our focus will be," Vijay Shekhar Sharma, chairman and managing director of One97 Communications, told VCCircle.

While historically the company was working with network carriers and focusing on services like customer and behaviour analytics, One97 now plans to target the country's 900 million-plus mobile subscribers through services like PayTM, a mobile commerce platform. While the business with mobile carriers continues, merchants and brands targeting mobile Internet user will also become One97's primary customers, explained Sharma.

The company is also looking to launch some more 'consumer-driven mobile marketing destinations,' some of which are currently in beta stage, he said.

The funds will be used for platform expansion, R&D and technology spend in India, besides expanding into other emerging markets like Asia and Africa which already provide 5 per cent of its revenues. The firm's revenues increased from Rs 116 crore in FY10 to Rs 183 crore in FY11 while profit after tax was around Rs 38 crore for the latest fiscal.

"One97 is right in the middle of exploding mobile usage among consumers in developing countries who are using their mobile phones to access the Internet, play games, buy content and shop online," said Jai Das, managing director at SAP Ventures, headquartered in Palo Alto, California.

PE Firms Filling IPO Gap

As the IPO market has virtually closed down, private equity firms are increasingly zooming in on this opportunity and filling the gap.

One97 had received a go-ahead from the market regulator SEBI for raising Rs 120 crore in its maiden public float last year and had originally planned to list by December 2010. But in the backdrop of increasingly volatile stock markets and due to the company's increased focus on the mobile Internet space, it had shelved the IPO plan and decided to rope in a PE investor, as reported by VCCircle earlier. The company will fund its expansion with the proceeds from the current round and also from internal accruals (One97 is sitting on Rs 100 crore of cash).

Before the current round, SAIF Partners held 36.7 per cent stake in the company while Intel Capital had 9.7 per cent stake. The promoters, led by Sharma, held 38.52 per cent stake.

Incidentally, AGS Transact Technologies Ltd, an ATM outsourcing and systems integration company that had filed for an IPO last year, raised Rs 145 crore ($32 million) in private equity funding from TPG Growth. Bangalore-based real estate developer Shriram Properties, the realty arm of Shriram Group that planned an IPO in 2010, also raised $100 million from TPG Capital in June this year. In spite of filing its DRHP, Avantha Power had also raised funding from Kohlberg Kravis Roberts & Co. and Faering Capital. And several real estate companies like Emaar MGF, Embassy and Kumar Urban Developers had raised funding at project level although they had filed for IPO.

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