Salebhai Internet Pvt. Ltd, an online marketplace for speciality foods backed by BCCL’s ad-for-equity platform Brand Capital, has filed a draft prospectus with BSE to list its shares on the exchange company’s small and medium enterprise (SME) platform.
The Ahmedabad-based company, whose marketplace offers sweets and snacks, chocolates, bakery items, spreads, and syrups, and dried fruit, has proposed to issue nearly 2.26 million fresh shares.
Salebhai is looking to raise about Rs 23.73 crore through a fixed-price offer at Rs 105 per share. The initial public offering (IPO) will result in a stake dilution of 26.58%. The company claims to be the first business-to-consumer (B2C) e-commerce startup firm to file for an SME IPO.
“This move [IPO proposal] comes after SaleBhai [name of marketplace] had already garnered the interest of 71 high net worth (or very wealthy) individuals,†said the company’s press release. "Most of them were customers who became investors in the company. They were quick to invest in this growing business. This interest from existing customers propelled the company to move to raise money from the general public through an IPO."
Salebhai is among two dozen firms looking to list on the SME platforms run by BSE and National Stock Exchange (NSE).
The decision to list on smaller platforms is driven by increased investor participation, liquidity and positive sentiment in equity markets buoying valuations and share sales for the past couple of years.
In all, 70 companies have got their shares listed on SME platforms this year. Together, these firms have raised about Rs 1,150 crore, show VCCircle estimates.
This follows a record year in 2017 when SME firms raised about Rs 1,700 crore from public investors, the highest since BSE and NSE launched their SME platforms in 2012. More than 400 firms have since listed on such platforms.
Here’s a snapshot of the proposed SME IPO by SaleBhai:
Issue
Salebhai is looking to raise Rs 23.73 crore by issuing nearly 2.26 million in fresh shares. The IPO will result in post-issue stake dilution of 26.58%.
The IPO price is fixed at Rs 105 apiece. The company has reserved 1.16 lakh shares for the market maker in the IPO.
Use of proceeds
The company will use Rs 7.5 crore out of the fresh proceeds towards customer acquisition, besides looking to use Rs 5.43 crore as operating expenditure, and Rs 5 crore towards developing its IT infrastructure, maintenance and development.
It will also spend Rs 5.1 crore for general corporate purposes and Rs 20 lakh for brand building and promotional activities.
Banker
Monarch Networth Capital is the sole merchant banker managing the IPO.
Lawyer
M/S Pooja Legal Ventures is the sole legal advisor to the company on the IPO.
Company
Salebhai was founded in 2015 by Purba Kalita, Vishwavijay Singh, and Anand Prakash Varani.
Kalita has worked with Flipkart and media house Bennett, Coleman & Co. Ltd. Singh has worked with Airtel, Nerolac Paints and ICICI Lombard. Rao is a software professional who has worked with Polaris and Expedite Solutions. Shukla has experience in channel development and management and has worked with companies such as Nerolac Paints. Varani has over 20 years of experience in finance and previously worked with Airtel and Axis Bank.
The company sources 8,500 products from more than 100 cities and 350 select vendors. Its offerings include sweets, snacks, chocolates, bakery items, spices, dry fruits, Indian handicrafts, paintings, puja items, herbal goods, wellness products.
The company does not stock any goods, while it has outsourced logistics operations to its logistics partners.
Funding
In August 2016, Salebhai raised Rs 10 crore ($1.5 million) from Brand Capital, Bennett, Coleman & Co. Ltd’s ad-for-equity platform.
In February that year, Salebhai secured an undisclosed amount from a group of very wealthy individuals and customers.
Some of the investors who participated in that round included Hungama vice-president Virendra Shekhawat, Malaysian bank CIMB director Deepak Chokhani and Australian firm Instani's promoter Yogesh Patel.
Nearly 10 investors, which include senior executives from ICICI Bank, State Bank of India, Microsoft and Godrej, had put in between Rs 5 lakh and Rs 1 crore in the startup.
Financials
Salebhai reported a loss of Rs 1.6 crore for the 10 months ended January 2018 on revenue (from operations) of Rs 89.14 lakh for the same duration.
The company reported loss of Rs 2.88 crore for the financial year 2016-17 - its second year of operations - on revenue of Rs 45.42 lakh, as per its draft prospectus.
*This article has been updated to correct information related to the company's founders.