India's JustDial IPO to ring up to 12X returns for VCs

India's JustDial IPO to ring up to 12X returns for VCs

Summary: By floating a 25 percent stake of the Indian classifieds site Justdial, founders and venture capital investors are in line for a huge windfall.

TOPICS: Start-Ups, India

Indian classifieds Web site, Justdial, could be valued as much as US$690 million when it lists on the Indian stock exchange next Monday.

TechCircle reported the popular small business directory recently advertised its intentions to execute an initial public offering (IPO) on May 20, 2013.
Justdial will sell nearly 17.5 million shares for US$8.54 to US$9.87 (470 and 543 rupees) each, according to the ad. The sale of the 25.02 percent stake will raise between US$149 million and US$172 million (8.2 billion to 9.5 billion rupees), valuing the company at between US$581.8 million and US$690 million (32 billion and 38 billion rupees).
By floating the company, founders and venture capital investors--who have tipped in almost US$100 million--are in line for a huge windfall.
  • SAIF Partners is expected to a earn a 10 times return on investment (ROI) in the company, by selling 6.52 percent of its shareholding. It will retain a 11.2 percent stake.

  • Tiger Global is expected to earn nine times ROI by divesting an identical stake, which leaves it owning 13.38 percent of Justdial.

  • Sequoia Capital will claim a ROI of up to 10 times by selling half of its 19.31 percent stake. Whether the other half is profitable will depend on the eventual issue price, such as whether it launches at below its cost of 488.66 rupees per share. Sequoia's investments were made in three tranches from 2009 to 2012.

  • Promoter V.S.S. Mani and COO V Krishnan will also sell their shares.
Justdial provides local search services via phone operator, Web, mobile app and SMS.
Founded in 1994, the call center and online operation listed almost 7.7 million small businesses as of June last year, and over 22 million reviews and ratings.
Deepak Srinath, founder of Bangalore-based VC investment advisor Viedea, told ZDNet he was "bullish" on the IPO.
"The price band and market cap are in line with expectations and the IPO is getting a "buy" recommendation from a lot of brokers and analysts," Srinath said.
Srinath previously told ZDNet that investors would expect a valuation between US$700 million and US$1 billion in order to claim a 10X return on the US$100 million they have tipped into the company.

Topics: Start-Ups, India

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  • For Every Rupee An Investor "Earns" Someone Loses a Rupee

    Groupon is a prime example. A worthless concept that manipulated the Press and Financial Community with one of the biggest scams ever.

    Allegedly Groupon receive $950,000,000 investment. There was an uproar that the owners pocketed the money and did not invest it in the company. Why? Because there was no $950 Million.

    It was a scam to drive up the price of the stock. They then leaked a story Google offered $6 Billion. Examine the timing and the sources they leaked the story to.

    Google was prohibited by law on making any comment on the rumor Groupon's manipulative jackal investors invented. Google NEVER offer Groupon a dime!

    A company that is a Web Based company like Groupon one might be inclined to think they would have a top notch Web Site. Groupon's Site? Drupal Open Source with 8-12 second page load times.

    The "investors" are only interested in sucking every dollar possible out of the company coffers before the SEC shuts them down. Every Groupon acquisition was a sham to transfer money back to the Groupon jackals. TGhe bought a Socaial Networking company. does Groupon have any social networking? No!

    Look at the Groupon acquisition of Breadcrumb, an iPad PoS "system" (like the iPad is capable). Where to start to look? How about the App Store. Not enough user reviews for Apple to post the results. Look at Breadcrumb's web site. Click on the user forum. There is a link to click. It goes nowhere. Look at how the reviews are worded. Is that how REAL users talk? Look at when Groupon bought Breadcrumb, after the end of the quarter. They did not announce this acquisition until after the next quarter. Why? So no one would care to ask too much.

    That my friends is the World of Investment as it is today. The Jackals skirting every legal obstacle to screw as many people as fast as they can without first getting caught.

    There are two kinds of people involved in these types of investments: Greedy Jackals and the Greedy Fools that are soon parted from their money.