JustDial IPO Analysis

Details:

Company Promoters:

1. V.S.S. Mani, Managing Director and Chief Executive Officer of the Company. 2. Anita Mani, former Director of the Company. 3. Ramani Iyer, Non-Independent, Executive Director of the Company. 4. V. Krishnan, Non-Independent, Executive Director of the Company. IPO Lead Managers: [Book Running Lead Managers]

1. Citigroup Global Markets India Private Limited

2. Morgan Stanley India Company Pvt Ltd

IPO Offer Registrar: Karvy Computershare Private Limited >Issue Open: May 20, 2013 - May 22, 2013 >Issue Type: 100% Book Built Issue IPO >Issue Size: 17,497,458 Equity Shares of Rs. 10 >Issue Size: Rs. 919.14 Crore >Face Value: Rs. 10 Per Equity Share >Issue Price: Rs. 470 - Rs. 543 Per Equity Share >Market Lot: 25 Shares >Minimum Order Quantity: 25 Shares >Listing At: BSE, NSE, MCX IPO Grading: This offer was graded by CRISIL Limited as 5/5 which indicated that the fundamentals for this offer are strong relative to other equity securities listed in India. IPO Discount for Retail Investors: Just Dial has offered a discount of 10% to the floor price to the retail individual investors. IPO Safety Net to Retail Investors: Just Dial has adopted a 'safety net' scheme for its retail investors as proposed by the capital market regulator SEBI, where the company promoters assure that they will buy back shares from the retail applicants at the IPO issue price, if its stock falls sharply (20% below issue price) during the first six months after listing.

Objectives of the Issue:

1. Equity Shares to be listed on the Stock Exchanges [NSE, BSE, MCX] 2. To carry out the sale of 17,497,458 Equity Shares by the Selling Shareholders in order to raise Rs. 822 cr. to Rs. 950 cr of equity capital.

Incorporated in 1996, Justdial Limited (Just Dial) is popular local search service provider in India. Just Dial’s search services are available to users through Internet, mobile Internet, telephone and text (SMS). Selling advertisement and qualified leads is the main source of earning for Justdial. They have more than 145,000 paid advertisers. Companies promote their brand across the Just Dial network and reach millions people who are actively looking for information about the products and services. There are 4 ways available to promote brand or advertise on JustDial including Listing on Web, Listing on Phone Search, Listing on Mobile Search and Placing Video Ads. Previously, CEO and Managing Director VSS Mani has had 5 failed attempts at listing JustDial stock - twice on the NASDAQ and twice each in August 2011 and August 2012 for an IPO in India. JustDial had initially filed its draft red herring prospectus with SEBI to raise Rs 360 crore in August 2011, but later shelved its plan due to sharp fluctuations in the market and instead went ahead and raised Rs. 327 crore from existing Private Equity investors Sequoia Capital and SAP Ventures. In August 2012, JustDial looked to sell 9.55 million shares through selling shareholders SAIF Partners, Tiger Global Four JD Holdings, Tiger Global Five Indian Holdings, Sequoia Capital, EGCS and SAP Ventures but wasn't successful. Eventually in May of 2013, a public offer of 17,497,458 equity shares was made of a face value of Rs. 10 each of Just Dial Limited for cash at a price of Rs. 530 per equity share through an offer for sale by the selling shareholders aggregating up to Rs. 919.14 crores. A discount of Rs. 47 per equity share is being offered to retail individual bidders which was the retail discount. With an offer price of Rs. 530 and a face value of Rs. 10, the offer price was 53 times the face value. According to the JustDial allotment process, 75% of the offer would be allotted on a proportional basis to QIB (Qualifies Institutional Buyers) provided 30% of the QIB portion is allocated to Anchor Investors by company and other selling shareholders wherein 5% of the QIB portion available for allocation to Mutual Fund's only (excluding Anchor Investments). The remainder 40% to all other QIB bidders including MF's on a proportionate basis subject to valid bids being received at or above offer price. Not more than 15% of the Offer shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not more than 10% of the Offer shall be available for allocation to Retail Individual Bidders in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Number of Times Issue is Subscribed

(BSE + NSE)

As on Date & Time Qualified Institutional

Buyers (QIBs)

Non Institutional

Investors (NIIs)

Retail Individual Investors

(RIIs)

Total

Shares Offered / Reserved

9,186,170 2,624,618 1,749,745 13,560,533

Day 1 - May 20, 2013 17:00 IST

0.7200 0.0000 0.1400 0.5000

Day 2 - May 21, 2013 17:00 IST

0.8900 0.0100 0.7000 0.7000

Day 3 - May 22, 2013 17:00 IST

10.1200 22.3400 3.5300 11.6300

On Day1, majority of the bids came from Foreign Institutional Investors (65,87,275 shares) which is about 72% of the total shares on offer for QIB's with 14% of the bids coming in from Retail Individual Investors(RIIs). At the end of Day2, RIIs caught up with bids for 70% of the total shares on offer for them while Non-institutional investors bid for a marginal 1% of the shares on offer to them. Finally, at the end of Day3, the JustDial IPO stood 11.63 times oversubscribed. JustDial and the selling shareholders in consultation with the book running lead managers, have allocated 3,936,925 equity shares to anchor investors at Rs. 530 per equity share. All the money raised in the IPO will go to pay existing shareholders, who will exit to the extent of 25% of the company’s shares.