Internet space's largest IPO, Justdial to open on May 20

It's the largest initial public offering (IPO) in the Internet space. Justdial's IPO valued at a whopping of around Rs 950 crore is set to hit the market on May 20, CNBC-TV18’s Kritika Saxena reports.

CNBC-TV18 has been following this development for almost three-to-four years. Though Justdial has attempted to launch an an IPO, the plans were cancelled due to a lackluster market. The company plans to offer around 25.02 percent of fully diluted paid-up equity share capital, indicating the exit of current investors.
The entire IPO largely has been structured via an offer-for-sale (OFS) route. The pricing is fairly competitive and is structured at Rs 470-Rs 543 per share.
Several analysts have been indicating that the pricing is at par with the company's demand and growth trajectory.
The only concern raised by investors and analysts alike is that the IPO is structured purely through an offer-for-sale route and does not entail the raising of any fresh capital.
VSS Mani, founder and CEO, Justdial says, "Close to 60 percent of Justdial is owned by private equity investors like Sequoia Capital, Tiger Global, SAIF Partners, and SAP Ventures. All of them are selling on a pro rata basis to some extent. Overall, the shareholders will continue to own more than 50 percent. We have adopted the OFS route because the company already has enough cash."
“The rationale behind the pricing is that it's part of a book-building process, and has been formed based on the response received at roadshows. Compared to the 40-percent Internet penetration among BRIC nations (Brazil, Russia, India and China), the Internet penetration in India is at 11 percent. So the opportunity for growth in India is very high," says Mani.
The company's sales for FY12 grew 42.5 percent, PAT (profit after tax) was up around 84 percent and EBITDA (earnings before interest, taxes, depreciation and amortisation) margins were at 25.70 percent.