Infibeam Avenues Ltd has agreed to sell a wholly owned unit that operates its online marketplace to Suvidhaa Infoserve Pvt. Ltd, a Mumbai-based fintech company that counts billionaire Shapoorji Pallonji Mistry as an angel investor.
Mumbai-listed Infibeam said in a stock-exchange filing on Monday it will first sell a 5% stake in NSI Infinium Global Pvt. Ltd, which operates Infibeam.com, to Suvidhaa for Rs 25 crore.
The transaction values Infibeam.com at Rs 500 crore. It will divest the remaining stake to Suvidhaa at a later date, Infibeam Avenues said, without disclosing any details.
The decision to sell NSI Infinium comes barely two-and-a-half months after the unit came under public scrutiny. On 28 September, WhatsApp rumours that Infibeam had given interest-free and unsecured loans to NSI Infinium, which had negative net assets, dragged the parent company’s stock down 70%.
Infibeam later admitted that it had given interest-free and unsecured loans to NSI lnfinium but said that it had obtained legal opinion that the loans do not fall foul of the Companies Act.
Shares of Infibeam gained 4.6% on Monday in a Mumbai market that rose 0.85%. The company now has a market value of Rs 3,234 crore ($452 million), far lower than the $1 billion valuation it commanded until a few months ago.
Infibeam started off primarily as an e-commerce firm, but pivoted its business model subsequently. Its core e-commerce solution BuildaBazaar and payment solutions business CCAvenue together accounted for nearly 98% of revenue for 2017-18 while the marketplace made up the remaining.
For the second quarter of 2018-19, the company posted a significant rise in operating revenue, thanks to growth in its web services business. Operating revenue jumped 83% to Rs 134.82 crore for the quarter ended September 2018 from Rs 73.74 crore a year earlier.
Total expenses nearly doubled to Rs 137.46 crore during the period, with payment gateway processing charges accounting for nearly 80% of the costs.
Net loss stood at Rs 4.5 crore for the second quarter of 2018-19. The company had reported a net profit of Rs 1.05 crore for the year-ago period.
Deal with Suvidhaa
This will be Suvidhaa's first acquisition since 2015 when it acquired mobile point-of-sale startup Aasaanpay Solutions Pvt. Ltd, which operates under the brand AasaanPay.
The latest deal entails a plan to develop an omnichannel marketplace whereby Infibeam.com will be connected to Suvidhaa's network of 91,000 outlets under 4,500 postal code areas.
Suvidhaa will use its offline capabilities to scale the product business of Infibeam Avenues and focus on niche product verticals with margins while Infibeam will leverage the physical retail location of Suvidhaa to offer last-mile logistics across the country, said Infibeam.
Suvidhaa distributes personal and business loans, provides mutual fund, insurance and banking services, and distributes prepaid cards. It also offers utility bill payments and travel ticketing services.
The company was founded by Paresh Rajde in 2007 with angel funding from Mistry. During 2008-10, it went on to raise venture funding from Norwest Venture Partners, Reliance Venture Asset Management and International Finance Corporation.
In late 2011, it got on board Japan’s Mitsui & Co Ltd, which invested $12 million (Rs 60 crore then), taking its total funding to around $25 million.
All these investors have since exited, according to Suvidhaa’s website.