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OnMobile To Raise Rs. 350-450 Crores From IPO; Price Band – Rs. 425-450; Opens 24th Jan

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OnMobile Global, India’s largest mobile Value Added Services (VAS) company, is looking to raise Rs. 350-450 crores from its Initial Public Offering, with shares priced between Rs. 425 and Rs. 450 for shares of face value Rs. 10 each. The issue will be open for subscription between January 24th and 29th 2008. The issue would constitute 18.99 percent of the post-Issue paid-up capital of the company, once listed on the BSE and NSE; it includes a fresh issue of 8,613,356 shares, and the sale of 2,287,189 shares from Onmobile Systems Inc.

OnMobile was incubated at Infosys, and the company has opposed the IPO; OnMobile CEO Arvind Rao tells CNBC-TV18 that promoters will hold a significant part of the company, though he doesn’t confirm whether Infosys is selling its stake or not. The company will use the money to make infrastructure investments in its offices at Bangalore, Mumbai and Delhi, set up R&D centres, repay loans and expand their team. The proceeds will also be used for expanding international operations — offices in London and the US — and acquisitions with the primary goal of acquiring products. Last year, OnMobile had acquired VoxMobili, reportedly for $35.12 Million.

The companys Profit after tax was Rs. 337.2 million in 2006-07, up from Rs. 140.2 million in 2005 at a CAGR of 55.1 percent. 90 percent of 2006-07 revenue was from revenue sharing agreements with carriers. 81 percent of revenue is from its top five customers, Over 40 percent from music, mostly Caller Ring Back Tones.

The Issue has been graded above average by CRISIL and has been assigned a grade of 4/5 (download the report here). 30 percent of the issue will be allocated to Retail investors, while 60 percent will be offered to Qualified Institutional Buyers (QIBs) (5 percent to Mutual Funds) and not less than 10 percent to Non-Institutional bidders.

Press Release | DRHP | CRISIL Report

8 Responses to “OnMobile To Raise Rs. 350-450 Crores From IPO; Price Band – Rs. 425-450; Opens 24th Jan”

  1. Do not have much understanding about their integrity and service – but based on my financial market background – am sure that this issue is costly. They are expecting a too high premium which is uncalled for. Its difficult for the issue to sail through in this environment.

  2. digital man

    I agree with SK. not sure about the options to OnMobile .. but have definite issues with their integrity issue …they should stop calling themselves as infosys company … you should see the way onmobile "services" hutch employees to ensure contract continues … hungama and onmobile both would just want encash before their bubble bursts … T-series is holding both these companies to ransom … BK is the smartest man in the VAS industry …

  3. OnMobile is too small a company to have any affect on the price of Infosys. Am shocked that you're even asking this question. Also, if you ask around, you'll know that a lot of OnMobile's customers are not happy with their level of service and commitment.

    Just banking on the 'Infy' name isn't enough, one needs to emobdy those values too. There are gross irregularities in their billing and reporting system that a lot of their partners have painstakingly realised, and gone are the draconian days when music companies and operators had no choice but to work with OnMobile, since they were the only one in that space…but that's when infrastructure costs etc. were high and there was relatively lesser technical know-how.

    There are better equipped companies like IMI Mobile and Tanla Solutions who're getting into the fray and how!! Wait till the big guys get into the game, and see the tables turn.

    And I'm not the only one waiting for this to happen.

    Cheers!

  4. This is good news for all the people who stuck around with OM. Arvind will be the new man in town with a net worth of what 3-400Cr. assuming he owns 15% of the company.

    I wonder what the revenues are looking like after Airtel's adjustment of revenue shares recently. If this IPO succeeds, it would bode well for many smaller companies waiting in the wings. I am worried that if this fails (due to the excessive premium being looked at, Jamba was valued at US$270mln vs. this which is US$600+) it would not look to good for the others.

    But in todays environment, it might succeed for people looking to participate in the telecom boom and the expected allied services boom.