Infibeam Incorporation Ltd IPO Message Board (Page 13)

Reacting strongly to murmurs about two bankers — Kotak Mahindra Capital and ICICI Securities — quitting the listing process of India’s first public issue of an e-commerce firm, Vishal Mehta, Managing Director of Infibeam, attributed it to a malicious campaign is being run by unknown sources in the market.

The issue opens for subscription to public on Monday and closes on Wednesday.

In June 2015, when the company had filed the draft red herring prospectus (DRHP), it had four book-running lead managers (BRLMs) to market the public issue besides looking into the compliance part and the due diligence process. They were SBI Capital Markets, ICICI Securities, Kotak Mahindra Capital and Elara Capital (India) Pvt Ltd.

But when the Ahmedabad-based e-commerce player filed its final red herring prospectus (RHP) with SEBI earlier this month, it did not have Kotak Mahindra Capital and ICICI Securities as BRLMs.

Murmurs started doing rounds of these two leading bankers opting out of the IPO, disagreeing on the timing of the issue and on the valuation. “All four of them did the due diligence satisfactorily. But the other two bankers did a better job. And ultimately it is the company’s choice as to whose services it wants to continue. There is full compliance on our part by clearly informing the regulator about the absence of the other two merchant bankers,” Mehta told BusinessLine.
Mixed view

An Elara Capital source, connected with the IPO process, remained confident about the public issue. However, analysts continue to remain sceptical about the sector, and, hence, the issue especially after the latest development.

“It is a very serious development and raises doubts if those bankers had lost confidence in their client. There is scepticism about the overall sector as well since it has not been much profitable,” said Kishor Ostwal, Chairman and MD, CNI Research. Also, recently, Morgan Stanley had downgraded Flipkart’s valuation. So, in the absence of a clear comparison, it became difficult for investors to make a choice.

But Ahmedabad-based Vaibhav Shah from Monarch Networth sees Infibeam as a trendsetter for e-commerce sector. “There could be some hesitation among the investors to subscribe to an issue to which they do not have any immediate comparison. But look at it from the global point of view. You will see a future Amazon or an eBay in it.”

no need to apply to infibeam it will be below rs 350 after listing may be

its better to go to flipkart and do shopping and avoid infibeam ipo

Pricing of Infibeam IPO appears too ambitious will be difficult to compete with existing giants

Unlike several other ecommerce startups, which have chosen private equity route for funding, Ahmedabad-based Infibeam has preferred to raise Rs 450 crore from the primary markets. However, it doesn''t seem to have compromised much on valuation. At the higher end of the IPO price band, its valuation works out to 6.5 times its sales. The company reported profit in the first half of FY16 after posting net loss in each of the years between FY11 and FY15. Given this and the aggressive pricing, investors will be better off giving the IPO a miss.

Business Infibeam is primarily into two businesses — sale of products on the Infibeam website and sale of services which include helping other companies to build their own retail website and provide all the backend services such as access to customers across sales channels, cloud services and managing distribution and logistics. Some of its clients include Crosswords Bookstores, Panasonic India and Gulf oil lubricants.

Financials Out of the total revenues of Rs 122.8 crore in the first half of FY16, sale of products accounted for 71% and remaining 29% came from the services business. While the ecommerce business is loss-making, services business, although smaller at present delivered strong 57% gross margin in the said period. At the end of September 2015, net cash with the company was Rs 70 crore.
Pricing of Infibeam IPO appears too ambitious will be difficult to compete with existing giants

Valuations Valuing an ecommerce startup has always been tricky. Unlisted e-commerce firms such as Flipkart and Snapdeal have grown by compromising on profits and have managed to sustain due to several rounds of funding. It will be a challenge for Infibeam to compete with the giants and show growth with such limited funding. Its earnings for the next few years will primarily depend on its services business which is very small and the scalability of which remains to be seen. Also most of the cash flows from the services business will be taken away by the ecommerce business. At an annualised FY16 sales of Rs 350 crore and net profit of Rs 13 crore, demanding a market capitalisation of about Rs 2,300 crore appears to be too ambitious.

Helpful analysis...only helps convince that this an avoid..but bankers having walked out...is a clear signal to stay away!

guys how to earn in ipo ?

ALSO LEARN HOW DO WE ARE LOOSING AND GAIN. sometime we loose sometimes gain

Now a days whatever we gain in one ipo, we lose double the amount in next IPO. So I better sit and eat ground nut candy or relax in a park watching, sight seeing.

ok then gvk infra and parag milk food good ipo septaji ?

u have wait

Infibeam listing on 4th i think RBI policy on 4th
Even an eye on this event

what is real value of infibeam ? How to measure it ?

It lower then what they want thumb rule VC invest the max will pay 5 to 6 times its topline revenue of infibeam was Rs 288.3 crore multiply that 6 times equates approx 1700 crores

infibeam also over price

Two investment banks walk out of Infibeam IPO

In a rare instance, two top investment banks - Kotak Mahindra Capital and ICICI Securities - have walked out from the Infibeam initial public offering (IPO) citing difference of opinion over the timeline of the issue.
"The promoter was not happy with our advise he wanted to launch the IPO immediately but we wanted broader participation from investors," said a person familiar with the development.

Infibeam had initially named SBI Capital Markets, Elara Capital, ICICI Securities and Kotak Mahindra Capital, in its draft red herring prospectus filed with Sebi.

"Infibeam is our client and we didn''t have a go-ahead from our internal committee for the IPO so we decided that we shouldn''t be showstopper for the deal," said a senior banker close to the development. Both the I-banks formally walked out of the deal in mid-January.

the query was raised to have an idea about how damaging the exit can be to an ipo. I think it is better to evaluate the proposed IPO in the light of financials of the company and the Business prospects . Remember one thing it is the first E comm company to list and therefore will always carry a premium and never be cheaply available at discount . Look at the luke warm respose HEG ipo received from the investors even though it was available at a considerable discount to the peers like NH and to my mind is a very good business in LR. Infibeam , on the otherhand has no listed peers. will enjoy this premium - but for how long can''t say. Look at AliBABA one year after having Bumper listing , the stock is below its issue price. But I know if subscription levels are anything to go by , Infibeam might still steal show. Best

Revathi no listed peer doesn''t mean u start asking the moon. Let''s see how smart infibeam mgt has been. Either investors r smart or they r.

CEO Vishal Mehta says since Infibeam’s is the first e-commerce IPO in the Indian stock markets, investors will be keen to look at it.
Two of four domestic investment banks that were initially part of the upcoming primary issue for Infibeam Inc. Ltd have opted out as they were not comfortable with the pricing and the timing of the issue, said three people familiar with the matter.

Infibeam, which will be the first e-commerce firm to trade on Indian stock exchanges, will launch its initial public offering on 21 March. The business-to-business online marketplace is seeking to raise Rs.450 crore through its primary issue.

The change in the banker mandates is visible in the red herring prospectus (RHP) filed on 11 March by Infibeam. It shows just two bankers, SBI Capital Markets Ltd and Elara Capital (India) Pvt. Ltd, managing the offer. The draft red herring prospectus filed by Infibeam on 30 June mentioned Kotak Mahindra Capital and ICICI Securities as part of the team of bankers.

“We decided to go ahead with SBI Caps and Elara as they went ahead and took the lead in marketing of the offer and we were happy with their work,” said Vishal Mehta, managing director at Infibeam, in a telephone interview. He added that since Infibeam’s is the first e-commerce IPO, investors will be keen to look at it.

The two banks and the company could not arrive at a consensus on the valuation and pricing of the offer which led to a parting of ways, as the company was confident about the price it sought and wanted to move ahead with the launch, said one of the three people mentioned above.

Infibeam has fixed a price band of Rs.360-432 per share for it public offer.

The timing of the IPO launch was another bone of contention, a second person added.

“The e-commerce sector as a whole is facing several headwinds, with funding in private markets drying up and companies facing severe stress on valuations. Given this scenario, the bankers felt that launching the deal in the near term could be tricky affair.”

A Kotak Mahindra group spokesperson said in an email that “Infibeam and Kotak Investment Banking have mutually agreed to disengage and we wish them all the very best for the IPO”. An ICICI Securities spokesperson did not respond to an emailed query.

The exit of Kotak and ICICI comes in the backdrop of a recent markdown in valuation of e-commerce companies by some institutional investors.

On 27 February, Mint reported that a Morgan Stanley fund had trimmed the value of its stake in India’s most valued e-commerce company Flipkart by almost 27%. The fund has also marked down the value of its stake in other tech start-ups such as Dropbox Inc. and Palantir Technologies Inc.

“E-commerce companies are coming with valuations based on the registered or active number of customers and their gross merchandise value (GMVs),” said Deven Choksey, managing director, K.R. Choksey Shares and Securities Pvt. Ltd. GMV is the value of merchandise sold on the site.

“I am unsure how much premium you can give e-commerce companies just on the basis of their GMVs,” he added.

“In my view, listed companies in the e-commerce space will trade at discounted valuations till they are profitable,” Choksey added.

Infibeam, founded by former Amazon executive Mehta, turned profitable in the first six months of 2015-16.

The company posted revenue of Rs.171.3 crore and a net profit of Rs.6.6 crore for the six months ended September 2015. It reported revenue of Rs.288.2 crore at a net loss of Rs.9.8 crore for the year ended 31 March 2015.

The firm will the IPO proceeds to up a cloud data centre and up 75 logistics centres, it said in its RHP.

After the stock exchange listing, Infibeam will be valued at Rs.2,250 crore, Mehta said at a press conference on Tuesday. Match-making website Bharat Matrimony is another e-commerce company working on a share sale.

Mehta Saab first mover advantage doesn''t mean that everyone starts pricing the ipos at a price which is not even worth looking at. Seems we investors have given a wrong impressions to these promoters that the Indian public is fool n can be cheated. QH has amply demonstrated what can happen. Seems Mr Mehta wants to learn it the hard way too.

nice RKS

Differences over Rs 2200 cr valuation: ICICI Securites, Kotak withdraw from Infibeam IPO

Two investment banks — ICICI Securities and Kotak Mahindra Capital — the Rs 450-crore initial public equity offering (IPO) of Infibeam, an internet and e-commerce company. Disagreement over valuations was the reason, said three people with knowledge of the development.

But Infibeam said the decision was due to the small size of the offering.


A spokesperson of Kotak Mahindra Group said, “Infibeam and Kotak Investment Banking have mutually agreed to disengage and we wish them all the very best for the IPO.” ICICI Securities declined comment.

At the time of filing its offer document with the Securities and Exchange Board of India (Sebi), it had appointed four investment bankers — SBI Capital Markets, Elara Capital, ICICI Securities and Kotak Mahindra Capital — to work on the IPO, touted as the first by a company in the segment.

When Ahmedabad-based Infibeam started marketing the IPO with potential investors, ICICI and Kotak Mahindra Capital dropped out, as they couldn’t agree with the company’s management over valuations, said the sources.

The offer document was filed in June 2015. The go-ahead came in October and the company started taking to investors, termed ''roadshows'' in market parlance.

“The year 2014 was great for e-commerce companies. However, valuations started to correct (fall) in 2015. The banks wanted this trend to reflect in the valuations but the company was confident that it would fetch investors at higher valuations, which led to the differences,” said a banker, requesting anonymity.

“All four banks did a good job of due-diligence. However, when we entered the marketing stage, SBI Caps and Elara took the lead. As we had to raise only Rs 450 crore, we decided to go with only two investment banks,” said Vishal Mehta, managing director, Infibeam.

Infibeam at the top end of the price band is valued at Rs 2,200 crore. The company in the first six months of 2015-16 reported revenue of Rs 175 crore and net profit of Rs 6.2 crore.

It had losses in each of the previous five financial years.

As no domestic e-commerce company is listed, the valuations aren’t comparable.

Mehta said the company has arrived at these from “investor feedback”.

As Infibeam doesn’t meet Sebi’s profitability criteria, its IPO needs to be backed by institutional investors.

In other words, a minimum 75 per cent of the subscription has to come from institutional investors, as against 50 per cent in normal cases. The retail portion is restricted to 10 per cent.

Officials from SBI Caps and Elara who are working on the IPO said they were seeing strong demand from institutional investors.

ICICI Securities, Kotak Mahindra Cap exit from Infibeam''s IPO

ICICI Securities, Kotak Mahindra Cap exit from Infibeams IPO
Ahead of Infibeam Incorporation''s IPO early next week, two bankers ICICI Securities and Kotak Mahindra Capital have exited from the public issue of the online shopping portal.
While the company did not disclose any reason for their withdrawal, reports suggested this has happened over differences about pricing and timing of the IPO, the first ever by any e-commerce company in India.

There were no comments from the company in this regard.

The draft red herring prospectus with respect to the issue was filed on June 30, 2015 with SBI Capital Markets, ICICI Securities and Kotak Mahindra Capital Company as the global co-ordinators and book running lead managers and Elara Capital (India) Private Limited as the book running lead manager.

"Subsequently, ICICI Securities and Kotak Mahindra Capital Company have withdrawn their participation from the issue," according to the red herring prospectus dated March 11, 2016.

Infibeam Inc will hit the capital markets on March 21 to mop-up Rs 450 crore through an initial share plan, becoming the first ecommerce firm to tap the IPO route.

The company has fixed the price band at Rs 360-432 per equity share for the IPO.

The initial public offer (IPO) will conclude on March 23.

As per Draft Red Herring Prospectus, Gujarat-based Infibeam plans to come out with public issue of equity shares worth up to Rs 450 crore.

Infibeam competes with Flipkart, Amazon, Snapdeal and others in the ecommerce space.

Started in 2007, Infibeam runs several e-commerce services like Infibeam.com, BuildaBazaar, Incept and Picsquare.

It has proposed to list its shares on NSE and BSE.

The issue is being managed by SBI Capital Markets and Elara Capital India.

Infibeam plans to utilise the proceeds towards setting up of cloud data centre and shifting and setting up of registered and corporate office of the company.

Strong buyer.

guys infibeam will be hit or flop ? How much its fair value based on price to book value method ?

How can an issue from which bankers walked out between DRHP and RHP stage ever be a hit unless it is managed by operators...and manipulated!

Currently GMP 42-44 (very low volumes) ...
Heard grey is managed in case of Infibeam ...

majority of grey market r managed

septaji whats your view on infibeam

how much is market cap?

guys how to value infibeam bookvalue or eps method ?

As per SEBI rules if share price going below issue price, investor can get back their money back. I want to know process for it.

As in PCL and Quick Heal people are losseing money, one of my friend also loose money in both the IPO who in new to the market. So please guide me and suggest me what is the step to get back money for issue which are tradeing below IPO price. so that i can guide him.

wrong info when IPo market was very dry few years back no ipos RII were participating SEBI brought this rule for one issue JUSTDIAL that if share price list below issue price or fall below list price in few months then Justdial should buy at issue price however IPO market picked and SEBI did not apply this rule again for any IPO..... However i think all IPO should come with the rule at least for RII then Promoters will leave something on table however the drawback is that market will be flooded with speculators