Controversy hit Infibeam IPO to hit markets today

Online shopping portal, Infibeam Incorporation which is India’s first e-commerce company will tap the capital markets on Monday through their Initial Public Offering (IPO). The company is looking to raise Rs 450 crores. The company has fixed the price band at Rs. 360 - 432 per equity share for the initial public offer (IPO). The initial share-sale programme will conclude on March 23.

The issue even before hitting the markets sparked off controversies as two of the four domestic investment banks opted out on concerns over pricing and the timing of the issue. Kotak Mahindra Capital and ICICI Securities withdrew as bankers to the issue. SBI Capital Markets Ltd and Elara Capital (India) Pvt. Ltd are the only two bankers managing the offer currently.

The Ahmedabad based E-commerce company was founded by former Amazon executive Vishal Mehta. It competes with Flipkart, Amazon, Snapdeal and others in the e-commerce space. It will become the first E-commerce company in India to tap the IPO route.

Infibeam has two main businesses – the e-commerce marketplace called BuildaBazaar.com and the e-tailing business under infibeam.com.

BuildaBazaar.com manages and helps other players set up their e-commerce venture. It uses data analytics to help merchants target consumers and increase the rate of conversion from visits to transactions. This segment gives the company its competitive advantage. On the other hand, Infibeam.com is just like any other e-commerce retailer. It contributed about 72 percent of consolidated revenue for the six months ending September 2015, but margins were only one percent in this period.

The proceeds from IPO will get utilise towards setting up of cloud data centre and shifting and setting up of registered and corporate office of the company. Further, the funds will be used for setting up of 75 logistics centres, purchase of software and for other general corporate purposes.

On financial front, the company turned profitable in the first six months of 2015-16. It posted a revenue of Rs.171.3 crore and a net profit of Rs.6.6 crore for the six months ended September 2015. It reported a revenue of Rs.288.2 crore at a net loss ofRs.9.8 crore for the year ended 31 March 2015.

Infibeam is the 5th company to hit Dalal Street for IPO issuance in 2016. HealthCare Global, Quick Heal Technologies, TeamLease Services and Precision Camshafts have already raised funds through IPOs so far this year. Moreover, Bharat Wire Ropes launched its initial share sale plan on March 18.