Fairfax Financial Holdings is reportedly in advanced talks with Ahmedabad-based Infibeam — the online listed eCommerce startup in India, to grab a minority stake in the company.
As per the report, it is looking to invest around Rs 1,200 to Rs 1,500 crore in the company, for a stake of around 10 to 12 percent. The funding will reportedly be used by the company to fund its expansion plans.
Sources aware of the matter have told Economic Times that KPMG has helped with the valuation for the deal and investment bank CLSA Singapore has been advising Infibeam. A person aware of the development said,
Either the company will look to acquire a company or will help a global player with its India entry. In both cases it needs capital.
With its global reach and deep pockets, the evergreen fund (Fairfax) was a preferred partner for the company.
The investment is expected to take place at a premium of about Rs 1,500 per share to the current market price of Rs 1,438. The market capitalisation of Infibeam currently stands at Rs 7,805.77 crore.
The report suggests that Fairfax has convinced other investors such as CDPQ, Fidelity and Canada Pension Plan Investment Board (CPPIB) who had also shown interest in picking up a stake.
Infibeam, founded in 2007 by Sachin Dalal, is the only profitable eCommerce marketplace in India. The company went public in April last year with listing on NSE.
It recently was involved in discussions and reportedly submitted its term-sheet for the acquisition of troubled eCommerce platform Snapdeal. However, the deal didn’t materialise.
Infibeam posted a net profit of Rs 19.7 crore for the quarter that ended June 30 (Q1 FY17), growing 107% from Rs 9.6 crore in the same quarter. Its net profit also grew 44.85 percent from the preceding quarter.
Total revenue grew 79 percent to Rs 184.6 crore from Rs 103.1 crore in the same quarter last year. Total revenue stood at Rs 120.9 crore last quarter representing a growth of 52.69 percent sequentially.
The company earns significantly from its services segment that includes BuildaBazaar — a platform which provides cloud-based solutions for merchants. BuildaBazaar generates revenue by charging a set-up cost to merchants, as well as through monthly fee and a per-transaction commission.
As of the eCommerce business, Vishal Mehta, CEO of the company has said that the company will be investing around Rs 37.5 crore in the e-commerce segment this year to expand to 75 cities in the country.