E-commerce giant Infibeam will hit the share market today to raise Rs. 450 crore through an initial share plan, with issue priced at Rs 360-432 per share.
Infibeam will be the first e-commerce company to take the initial public offering (IPO) route in the country and the response it generates is bound to set a precedent for other online retail companies.
The IPO will be launched later today (March 21) and will conclude on March 23.
Started in 2007 by former Amazon executive Vishal Mehta, the company runs several e-commerce services like Infibeam.com, BuildaBazaar, Incept and Picsquare. The firm turned profitable with a net profit of Rs.6.6 crore in the first six months of 2015-16, however, it reported a net loss of Rs.9.8 crore for the year ended 31 March 2015.
Last week, Kotak Mahindra Capital and ICICI Securities withdrew as bankers from the public issue. The company did not disclose the reason for the exit, however, industry insiders viewed the development as a ‘call of concern.’ In fact, the whole IPO decision of the company is seen as a risky bet, as not just Infibeam but the whole e-commerce space in India has a poor track record of profits.
In 2014-15, Flipkart reported a loss of 836.5 crore. According to data available its much larger competitors including Snapdeal, Flipkart and Amazon have combined losses of Rs 7,884 crore for the year that ended March 2015.
Infibeam’s IPO document itself admits that they “have incurred significant losses in the past and may continue to incur significant losses in the future.”
The company has proposed to list its shares on NSE and BSE.
It plans to utilize the IPO proceeds towards setting up of cloud data centre and shifting, setting up of 75 logistics centres, purchase of software and setting up of registered and the corporate office of the company.