Infibeam turns profitable; to open first IPO by an Indian e-com venture on March 21

Infibeam Incorporation Ltd, the parent of horizontal e-commerce platform Infibeam and e-commerce enabler BuildaBazaar, is to hit the market with its initial public offer (IPO) on March 21. This would make it the first among peers, including those several times bigger, to go public.

Indeed, its proposed issue that has been in the planning stages for several years will test the waters for valuation in the sector. An investor in the biggest Indian e-commerce firm Flipkart recently wrote down the value of its investments in the firm, adding fuel to a similar perceptive from a section of analysts who have been questioning rising valuation of e-commerce firms.

Infibeam had received a green signal from securities market regulator SEBI for its initial public offering (IPO) to raise up to Rs 450 crore last October.

The firm had hired SBI Caps, ICICI Securities, Kotak Mahindra Capital and Elara Capital to manage the issue when it filed its DRHP. It has now disclosed in its red herring prospectus (RHP) that Kotak Mahindra Capital and ICICI Securities have withdrawn their participation from the issue. It did not give a reason.

Founded in 2010 by a former Amazon executive, Vishal Mehta, Infibeam would also become one of the youngest firms to list on a national bourse. Having restricted itself from raising private capital, unlike its peers, it did not get too aggressive in customer acquisition to drive the B2C business and has been especially pushing the B2B e-commerce enabler platform BuildaBazaar.

Infibeam would be the first pure-play e-commerce firm in the country to float an IPO in India and would test the general investors' appetite for the sector. E-commerce in India has absorbed billions of dollars over the past four years, much of it from foreign private equity and venture capital firms.

Infibeam happens to be an exception as it has not approached any major private investor for funds till now. It is promoted by a Gujarat-based affluent family whose business interest straddles a dealership for Toyota cars.

Interestingly, Infibeam made profit in the first six months of the current financial year. It reported net revenues of Rs 171.27 crore for the April-September 2015 period with EBITDA of close to Rs 15 crore and net profit (adjusted for prior period items) of Rs 6.5 crore.

It had clocked net loss of just under Rs 10 crore for 2014-15.

As of December 31, 2015, it had 48,724 registered merchants on the BuildaBazaar platform. In Infibeam.com e-retail site, in addition to direct sales procured from suppliers, it had more than 5,000 registered merchants, and claimed to have more than 7.8 million active users (based on last login in the immediately preceding 12 months).

To its credit, it is one of the rare horizontal e-commerce platforms to have survived without large external funding. Others like IndiaPlaza shut down as they failed to get follow-on funding, and as a consequence, investors funding got concentrated to the troika of Flipkart, Snapdeal and ShopClues. Global e-commerce behemoth Amazon itself has built a big presence in India and is among the top three ventures in the country.

Infibeam's only external equity funding has come from media house Bennett, Coleman & Co Ltd, which bet around Rs 33.3 crore through the ad-for-equity investment platform Brand Equity Treaties Ltd (BETL). BETL owns a 1.8 per cent stake in the firm. BETL also pitched in with Rs 2 crore of non-convertible debentures, which are outstanding.

It would expand the pool of public-listed internet related companies out of India. While online travel agency MakeMyTrip is listed on NASDAQ, Info Edge—the parent of Naukri.com and 99acres besides being majority stakeholder in ventures such as Zomato—is another listed firm in India. Local business site Just Dial that went public a couple of years ago in India is now morphing into an e-commerce marketplace itself and small firms Intrasoft (which runs 123greetings.com) and Rediff also have e-commerce exposure but are too small as ventures.

Lifestyle e-commerce venture Koovs is majority owned by a firm listed on London Stock Exchange's junior market AIM. Home shopping and e-commerce firm HomeShop18 planned to go public in the New York Stock Exchange but later withdrew the proposed issue after a change in management with Reliance Industries gaining control of the group.

Among others, the firm behind BharatMatrimony.com is also in the queue to go public.

For full details on Infibeam's proposed IPO, click here.

The article has been updated with additional information from the company's red herring prospectus.