Matrimony.com IPO opens: 10 things you must know before investing

Here are 10 things you must know before you invest in Matrimony.com IPO:-

Company Profile

Matrimony.com currently operates its business in two segments - one is matchmaking services and second is marriage services and related sale of products.

In the financial year 2016-2017 and quarter ended June 2017, matchmaking services and marriage services accounted for all of its revenue and there was no revenue from the related sale of products.

According to the comScore report, Matrimony.com is the leading online matchmaking services provider in India in terms of the average number of website pages viewed by unique visitors in June 2017 (Matrimony.com data does not include data from all sites under Matrimony.com).

The company delivers matchmaking services to its users in India and the Indian diaspora through its websites, mobile sites and mobile apps complemented by their on-the-ground network in India.

It runs online match-making business under several brands like BharatMatrimony, CommunityMatrimony.com, EliteMatrimony.com etc.

To provide matchmaking services to the Indian diaspora, the company has granted a non-exclusive, non-sub-licensable and nonassignable business license, of its certain brand names and domain names to wholly owned subsidiary, Consim USA that operates the NRI business in all territories outside India with effect from December 15, 2015 until December 14, 2019.

It provides marriage related services (like directory services, photography & videography, apparal, decorations, catering, venue booking services etc) through its other websites - MatrimonyDirectory.com, MatrimonyPhotography.com, MatrimonyBazaar.com and MatrimonyMandaps.com.

About the Issue

The public issue comprised of fresh issue up to Rs 130 crore and an offer for sale of up to 37,67,254 equity shares.

The offer for sale consisted of up to 14,61,006 equity shares by Bessemer India Capital Holdings II Ltd, 1,55,760 shares by Mayfield XII (Mauritius), 16,83,207 shares by CMDB II, 3,84,447 shares by Murugavel Janakiraman and 82,834 shares by Indrani Janakiraman. The offer also included a reservation of shares worth Rs 50 lakh for eligible employees.

Matrimony.com intends to raise Rs 500.3-501.07 crore through the issue, at a price band of Rs 983–985 per share.

It already raised nearly Rs 225.88 crore from anchor investors on September 8, ahead of its initial share sale opening on September 11. It will allot 22.93 lakh shares to 10 anchor investors (including Goldman Sachs, Small Cap World Fund, HDFC Trustee Company, Baring Private Equity India AIF, DB International etc) at higher end of the IPO price band.

Objects of the Issue

The company will use fresh issue proceeds for advertising & business promotion activities (around Rs 20 crore) and purchase of land for construction of office premises in Chennai (Rs 42.58 crore).

Fresh issue money would also be utilised for repayment of overdraft facilities (Rs 43.34 crore); and general corporate purposes.

However, the company will not receive any proceeds from the offer for sale.

Financials

Matrimony.com earns more than 95 percent of its revenue from matchmaking services.

The outstanding amount in respect of overdraft facilities and vehicle loan stood at Rs 43.41 crore as of June 2017.

Promoter

Murugavel Janakiraman, the founder and managing director of the company, holds 55.6 percent stake in the company (pre-issue). He has been associated with company since September 5, 2001.

He holds a bachelor’s degree of science in statistics and a master's degree in computer applications from the University of Madras.

He was previously employed with Sharper Logics Inc, Supra Data Systems and Real Soft.

Shareholding

Here are top 10 shareholders and their shareholding (stood at 99.4 percent pre-issue) in the company:-

After the issue, promoter shareholding in the company will be reduced to 51 percent and public shareholding will be 49 percent.

Management

Group Companies

India Property Online Private Limited and Infonauts Inc are two group companies.

India Property operates in the business of property marketing and advisory services while Infonauts is currently carrying on the business of providing administrative support to the overseas business of Murugavel Janakiraman.

Murugavel Janakiraman and Indrani Janakiraman (mother of Murugavel Janakiraman) hold nearly 53 percent stake in India Property (pre-issue) and the rest is held by public shareholders including CMDB II, Mayfield XII and Bessemer India Capital Holdings II.

Dividend Policy

Matrimony.com does not have a formal dividend policy. It has not declared any dividend on its equity shares during the last five years.

Risks and Concerns

Brokerage houses advise subscribing the issue but they have pointed out some risks which are:-

> One of the key risks that BharatMatrimony faces is competition from dating websites/Apps and other matrimonial websites/Apps.

> Any failure and/or delay in making the settlement payments (by subsidiary Consim USA) may materially and adversely affect their business prospects, financial condition, results of operations and cash flows.

In connection with the New Jersey proceedings and the Chennai proceedings, the company incurred legal expenses amounting to Rs 57.36 crore between FY13 and FY16 towards legal or other fees and expenses as well as the settlement cost of Rs 53.01 crore in FY16 in connection with the settlement of such proceedings.

> The company may fail to convert free members to paid members or fail to retain to their existing base of paid members.

> Diversification of business, other strategic initiatives may be unsuccessful. Tambulya.com and Matchify.com were ideas which did not materialise as planned.

> Reputation of the company could get hampered, if its service platforms are misused by any of its users.