Despite all the skepticism around, local search company JustDial has done it. Its Initial Public Offering, which sought to raise up to Rs 950 cr, was subscribed 11.6x on Wednesday, in what could be described as the largest public issue of the year.
Investors bid for 15.76 crore shares while 1.35 crore shares were on the offer, according to data on Bombay Stock Exchange.
At an issue price of Rs 470- Rs 543, Justdial’s promoters and investors including Sequoia Capital and SAP Ventures sold their shares in the company at the issue.
The IPO was subscribed 50% at the end of the first day of its opening this Monday but on Wednesday, the last day of the IPO, investors rushed in to buy into the JustDial story.
Shares of JustDial, priced at a multiple of 66x its earnings per share in FY12, was considered an expensive buy by many analysts. However, the markets seem to have gone the other way on this.
Retail investors, who were offered a 10% safety net bid 3.5 times the allotted shares while Institutional investors and qualified Institutional buyers bid for 22x and 10x respectively.
Internet Companies Must be Happy
The success of the IPO proves that the market has appetite for Internet and technology companies. While the company is largely a voice call based business, the management perceives that its future and competition lies in the Internet (especially mobile). JustDial’s was the first of its kind. There are more IPO hopefuls like HomeShop18 and Bharatmatrimony owner Consim Info in the wings. The JustDial IPO, despite being mostly used for paying off venture capital investors, was oversubscribed betraying signs of a highly positive market for Internet companies.
The multibagger exit for Sap Ventures, Sequoia Capital and SAIF partners, which invested in the company will encourage venture capitalists to make more bets on Indian Internet companies.