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

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

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.