Just Dial, Gives India Its Biggest IPO for 2013

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Just Dial Ltd. (NSE:JUSTDIAL) (BSE:535648) that operates the India-specific local business listings site Justdial.com listed its equity shares on the BSE and the NSE on Wednesday, June 5, 2013. The issue price was fixed at Rs 530 per share, but the company decided to offer Rs 47 discount to the retail investors. The price band for the issue was at Rs 470-543 per share.

Special IPO

The IPO is also special as it guarantees a ‘safety net’ to the retail investors. Under the agreement, if the share price dips below the issue price at any time during the scheme period then promoters will buyback the stocks from the original allottes, subject to the maximum of 1,000 shares per allottee.

Despite the strong opening received by the Just Dial’s IPO, experts believe that Indian IPO market will remain low in the near term as only few medium-to-large sized offerings are in the pipeline. Also, the NSE index is up only 0.2 percent year to date.

“The secondary market needs to be extremely strong for IPOs to benefit. So unless it is a unique IPO, it wouldn’t be successful,” said Deven Choksey, Managing Director of K. R. Choksey Securities in Mumbai.

Biggest IPO so far

The offering from Just Dial was the biggest by an Indian web-based and local search company. The issue from the internet company was subscribed almost 12 times. Also, the offering was the biggest in the country so far, in 2013. The issue from Just Dial, also, received a positive response from Foreign Institutional Investors (FIIs) and high net-worth individuals.

Just Dial’s IPO was the largest IPO since Bharti Infratel Ltd’s IPO raised 750 million in December last year. Just Dial’s founders and many private equity investors including Sequoia Capital and Tiger Global offered their shares in the IPO. Around 17.5 million shares were sold in the IPO representing 25 percent of the equity. Many foreign banks including Goldman Sachs (GS) and HSBC (NYSE:HBC) showed interest in the offering, along with domestic institutional investors Birla Sunlife Trustee Co. Singapore’s sovereign wealth fund Temasek and asset management major Fidelity, also invested in the IPO.

Citigroup (C) and Morgan Stanley (MS) were the lead managers to the issue.

At the end of first day trading

The IPO was listed at 11.1 percent premium to the issue price, on Wednesday, and overtook the largest listed Indian internet firm, Info Edge (India) that operates multiple sites including job portal Naukri.com. In the early trade, the shares were up nearly 18.6 per cent to Rs 628.70. However, at the end of the first day, shares were up 14.15 percent to Rs 605. At the end of the first day’s trading, market capitalization for Just Dial stood at Rs 4,227 crore or $745 million against Rs 3,712 crore for Info Edge.

Just Dial’s founder pocketed Rs.87 crore by offering 15.57 lakh shares in the IPO while PE investors earned 850 percent returns on their investments by selling shares in the IPO.

Mumbai-based Just Dial offers local businesses search through Internet and mobile platforms. The company was founded by VSS Mani, which started offering local search services in 1996 under the Just Dial brand.