IPO: Infibeam MD allays fears over exit of two lead managers

Reacting strongly to murmurs about two bankers — Kotak Mahindra Capital and ICICI Securities — quitting the listing process of India’s first public issue of an e-commerce firm, Vishal Mehta, Managing Director of Infibeam, attributed it to a malicious campaign is being run by unknown sources in the market.

The issue opens for subscription to public on Monday and closes on Wednesday.

In June 2015, when the company had filed the draft red herring prospectus (DRHP), it had four book-running lead managers (BRLMs) to market the public issue besides looking into the compliance part and the due diligence process. They were SBI Capital Markets, ICICI Securities, Kotak Mahindra Capital and Elara Capital (India) Pvt Ltd.

But when the Ahmedabad-based e-commerce player filed its final red herring prospectus (RHP) with SEBI earlier this month, it did not have Kotak Mahindra Capital and ICICI Securities as BRLMs.

Murmurs started doing rounds of these two leading bankers opting out of the IPO, disagreeing on the timing of the issue and on the valuation. “All four of them did the due diligence satisfactorily. But the other two bankers did a better job. And ultimately it is the company’s choice as to whose services it wants to continue. There is full compliance on our part by clearly informing the regulator about the absence of the other two merchant bankers,” Mehta told BusinessLine .

An Elara Capital source, connected with the IPO process, remained confident about the public issue. However, analysts continue to remain sceptical about the sector, and, hence, the issue especially after the latest development.

“It is a very serious development and raises doubts if those bankers had lost confidence in their client. There is scepticism about the overall sector as well since it has not been much profitable,” said Kishor Ostwal, Chairman and MD, CNI Research. Also, recently, Morgan Stanley had downgraded Flipkart’s valuation. So, in the absence of a clear comparison, it became difficult for investors to make a choice.

But Ahmedabad-based Vaibhav Shah from Monarch Networth sees Infibeam as a trendsetter for e-commerce sector. “There could be some hesitation among the investors to subscribe to an issue to which they do not have any immediate comparison. But look at it from the global point of view. You will see a future Amazon or an eBay in it.”