Infibeam IPO gets tepid response from institutional investors

Not a single bid from mutual funds

The Rs 450-crore initial public offer (IPO) of Infibeam Incorporation received tepid response from institutional investors. The IPO received good response from the non-institutional investors (NII) category. The NII category was subscribed 2.23 times and the retail investors' category was subscribed 1.31 times. The Qualified Institutional Buyers (QIBs) category was subscribed 86% or 0.86 times. Overall, the IPO was subscribed 1.11 times. The bidding for the IPO ended on Wednesday, 23 March 2016.

Within the QIB category, foreign institutional investors (FIIs) put in bids for a total of 53.40 lakh shares, domestic financial institutions put in bids for a total of 26.77 lakh shares and others put in bids for 11,560 shares. There was not a single bid from mutual funds for the IPO. A total of 93.75 lakh shares were reserved for the QIB category as a whole.

Infibeam Incorporation, the first e-commerce company to tap the capital market through an IPO, had set Rs 360-432 per share price band for the IPO. The proceeds of the IPO will be used for expansion of business, which includes setting up a cloud data center, setting up 75 additional logistics centres, purchase of software and purchase of property for shifting of the registered and corporate offices of the company.

Promoted by Ajit Mehta, Jayshree Mehta, Vishal Mehta and Malav Mehta, Infibeam Incorporation is an e-commerce company focused on developing an integrated and synergistic e-commerce business model. It owns and operates the Infibeam BuildaBazaar (BaB) e-commerce marketplace, which provides cloud-based, modular and customizable digital solutions and other value added services to enable merchants to set up online storefronts. The BaB Marketplace enables merchants to access customers across multiple sales channels and provide cost-effective marketing and distribution solutions. As of 31 December 2015, the BaB Marketplace had 48,724 registered merchants, which increased at a CAGR of 272.95% from 350 registered merchants as of 31 March 2012.

Infibeam Incorporation also operates Infibeam.com, a multi-category e-retail website primarily focused on fast moving product categories. The e-retail business strategically follows an asset light inventory model.

From the net proceeds of the IPO, the company has earmarked Rs 235.20 crore for setting up a Tier III data center and for purchase of property for shifting of the registered and corporate offices of the company at the location of the proposed Tier III data center in Ahmedabad. The company proposes to invest Rs 37.50 crore from the net proceeds of the IPO for setting up additional 75 logistics centres in 70 cities in India. Infibeam currently has 12 logistics centres strategically located in 11 cities across the country.

The company proposes to spend Rs 67 crore from the net proceeds of the IPO for purchase of certain software from third parties for setting up a software platform for providing mobile ad framework which includes customer targeting based on mobile criteria such as device, operating system, carrier or features of the device.

Based on consolidated financial performance, Infibeam Incorporation reported net profit of Rs 6.57 crore on revenue from operations of Rs 171.26 crore for six months ended 30 September 2015. The company reported a net loss of Rs 9.78 crore on revenue from operations of Rs 288.27 crore for the year ended 31 March 2015.

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