Info Edge, India’s largest online job site, raised Rs7.5 billion ($124 million) from a follow-on offering Friday.
The company, the country’s first internet company to go public nearly eight years ago, priced 10.1 million primary shares at Rs740 per share, a 3.5% discount to the September 4 close of Rs765.7 per share.
The final price of Rs740 per share is towards the middle of its indicative Rs730 to Rs755 per share range, which represented a 1.4% to 4% discount to the September 4 close. CLSA and Indian bank Infrastructure Leasing & Financial Services (IL&FS) oversaw the deal.
Some 30 institutional investors participated in the deal, mainly long-only institutional investors and domestic firms, a banker close to the deal told FinanceAsia, who described the book as “well oversubscribed.”
As a Reg-S offering, only Asian and European investors were allowed to participate in the follow-on.
Info Edge will use proceeds to invest in existing businesses, including 99acres.com, and will also mull acquisition and joint ventures, among other initiatives.
An impressive share performance so far this year clearly resonated with investors — shares in Info Edge are up 75% so far up to September 5, and the company is trading at 68.78 times its 2015 earnings. Its market capitalisation is $1.4 billion.
Info Edge floated its shares in November 2006 after pricing at Rs320 per share. In spite of the relatively small size of the IPO, which was marketed between $30 million and $40 million, the company received decent interest from institutional investors during its roadshow, given it was India’s first internet company to go public.
India equities
Info Edge becomes the latest company to tap the country’s equity capital markets. On August 7, Bharti Airtel, India’s top mobile phone carrier, offloaded a 5% stake in its towers business unit Bharti Infratel in an accelerated block trade, raising Rs21,395 billion.
Bharti Airtel initiated the sale to ensure it is in compliance with new securities laws that require listed companies in India to have a minimum of 25% of its shares available on the stock exchange.
Bharti Airtel, which previously owned 79.4% in the company as of June, saw its stake drop 5% through the share sale. It now owns 75% of Bharti Infratel and, as such, is in compliance with the requirements put in place by India’s National Stock Exchange.
Reliance Communications, Jaiprakash Associates, GMR Infrastructure and Prestige Estate Projects all raised money from equity capital markets this year, underpinning the confidence that has returned to the country’s equity markets. Investors returned in droves in May once it became apparent Narendra Modi would win the country’s general election. India’s Sensex Index is up 30% up to September 5.
The tide appears to be turning. According to an August survey by Bank of America Merrill Lynch, India went from being the most heavily favoured emerging market globally in July to one of the least favoured in August.
Emerging market managers are now a net 30% underweight the country, an about-turn from July, when a net 47% were overweight India, itself down from 75% in June and 50% in May but up from 44% in April.
Investors based in Asia also grew more negative on India, moving from a net 7% overweight to 1%.
“There was a lot of quick money to be made on the back of the election and now it’s settled down, for sure,” the banker acknowledged.
