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Update: JustDial to raise $165 million


October 28, 2014: Just Dial has issued a clarification pointing out that their IPO last year was an offer for sale (from investors), and the company hadn’t raised any funds via that IPO. The statement:

Last year we had completed our IPO, which was a 100% offer for sale and no fresh issue of equity shares was undertaken by us. Accordingly, we had not raised any funds in the company through the IPO. Further, our business has continued to generate cash and our cash balance has grown since the IPO to approximately Rs. 740 crs (including investments) as of Sep 30th 2014.

Our board of directors has passed an enabling capital raising resolution to ensure that we are prepared in the event a suitable opportunity arises for us to pursue any strategic objectives. As of now we have not indentified any such suitable opportunity that would require us to raise capital and we do not intend to hoard cash. We intend to act upon this enabling resolution only if we identify a suitable opportunity for pursuing strategic initiatives that requires us to expend capital over and above the funds currently available with us.”

October 21, 2014: The board of directors of directory services firm JustDial Ltd yesterday approved an additional fund raising of Rs 1000 crore (approximately $165 million) “through equity and related instruments”. For context, this is more than the Rs 950 crore the company raised when it listed in the Indian stock markets just a little over a year ago, when it sold 17.5 million shares at a price of Rs 530 each. At the time of filing this reports, JustDial was priced at Rs 1676 per share. At this price, Just Dial would be issuing around about 6 million more shares to raise Rs 1000 crore.

What will it use this money for? The company hasn’t yet specified what it plans to do, but there might be some context available in its earnings conference call today. It’s likely that the money will be used to move JustDial towards becoming more of a transaction platform (what it is calling ‘Search Plus’) from being a lead generation service (on mobile or calls). The company currently has over 20 plus services live for online transactions via Search Plus. It’s also launching a payments business called JD Cash, a payments platform integration for its Search Plus suite of services. It claims to aggregate 145,000 merchants on its platform, including grocery stores, medical stores, doctor appointments, and facilitating table bookings and food delivery from restaurants. For the quarter ended 31st March 2014, Justdial was reporting 650-700 food take-away orders per day on weekdays, and 1,200 orders on weekends, for the 25,000 food delivery services it aggregated, with cancellation rates of just 4-5%.

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Search Plus is potentially a higher margin business (than leads), and is far more scalable than telecalling. JustDial already has the vendor relationships for services, established over the years while running its tele-calling based lead generation services.

Note that another listed Internet company, Info Edge, recently raised funds for its real estate classifieds business 99Acres. More on its plans here.

Disclosure: Info Edge is an advertiser with MediaNama

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