Mobile value-added services (VAS) company One97 Communications has dropped its plans for an Indian public issue and will go for another round of private equity funding to raise around Rs 100 crore.
“We will plan for an international listing sometime in the future,” Vijay Shekhar Sharma, chairman and managing director of One97 Communications, told VCCircle.
The fast-growing company had received a go-ahead from the market regulator SEBI for raising Rs 120 crore in its maiden public float last year and had originally planned to list by December, 2010. But it decided to postpone the IPO by a few months with an updated prospectus. Although the company still has a few weeks left within which it can come out with the IPO, it has decided to shelve the plan for the time being.
The final decision comes in the wake of the capital markets continuing to be volatile, making the pricing for the public offering tough. The management is also of the view that the domestic market may not be appropriate to absorb the business model of the firm, which intends to position itself as a mobile internet company.
“In India, people understand sectors and not companies,” said One97’s Sharma who is also the promoter of the firm. According to him, the company is often clubbed with other firms which are not in the same business space due to lack of relevant peer group in terms of analyst coverage.
From a mobile messaging company, One97 has progressed to focus on mobile content and mobile commerce, and it is now seeking to evolve into a “significant mobile internet company.”
The company is now looking to raise up to Rs 100 crore in a private round of funding, a shade lower than the amount it was targeting to raise via the public float.
This is not the first time that the Noida-based company is raising institutional capital. One97 Communications is backed by private equity firm SAIF Partners and also Intel Capital, the corporate venture capital arm of chipmaker Intel Corporation. While SAIF Partners holds 36.7 per cent stake in the company, Intel Capital has 9.7 per cent stake in the firm. The promoters hold 38.52 per cent stake.
While the conversation is open with existing investors, the firm is also looking to raise money from other private equity firms. “We want to have Rs 100 crore in bank to have enough war chest for all our expansion plans,” said Sharma, who refused to divulge information on stake sale or the valuation that the firm is seeking.
The monies raised will be mainly used for acquisitions across the three verticals of the company – content, sales and commerce. Incidentally, it has been a consistent investor in early-stage mobile companies.
It has recently invested S$1 million in TheMobileGamer, a Singapore-based mobile gaming company. This came three weeks after the company announced investing an undisclosed amount in Singapore-based LeapSky Wireless, which provides easy-to-use 3G/WiFi-based mobile data services. LeapSky’s initial product converts local 3G to WiFi, making it simple and cost-effective to use roaming broadband services. The product looks to tackle the problem of high data usage costs for mobile users on roaming and leverages its patent-pending ‘Identity Management’ technology.
One97 made more than 2.5 times on its investment in Singapore-based tenCube last year. TenCube is a mobile security services company whose product includes WaveSecure mobile security service. It was acquired by McAfee, Inc. for $9.5 million in July, 2010, whereas One97 had invested in the firm in late December, 2009.
SAIF Partners and Intel Capital-backed One97 had also invested in companies such as Oorja (a customer analytics firm), Paytm (a mobile commerce platform) and Oc2ps (a social networking application).
One97 ended FY10 with revenues of Rs 112 crore, with a profit before tax (PBT) of Rs 26 crore. According to Q1FY11 numbers, revenues stood at Rs 36 crore and PBT at Rs 10 crore. One97 had reported revenue of Rs 40.7 core in FY08, which doubled to Rs 81.4 crore in FY09.
