Private Equity Backed Micromax Informatics Planning IPO


January 5, 2015

2014 was a busy year for initial public offerings (IPOs) and 2015 is starting in a similar manner. India’s second largest smartphone company is reportedly planning an IPO later in the year. According to reports, Micromax Informatics is looking to raise around $500 million.


The Economic Times reported first on the news over the weekend, stating the Indian company is starting to shortlist investment bankers for an IPO. Furthermore, the company is aiming to raise nearly $500 million “in the domestic market by diluting a minority stake.”


Growing Market Stake
Micromax Informatics has quickly increased its market share in the domestic markets in India. The company entered the handset market in 2008 by producing cheaper phones to the large domestic market. The company is currently the second largest smartphone maker in the country and is competing together with the bigger international players.


India’s smartphone market is crucial for the global industry, as the market is currently growing rapidly. The Reuters report highlighted how the smartphone market in India grew by 64% during the September quarter.


The market is currently controlled by Samsung, which has a 25% share in the market. Micromax Informatics has been able to increase its stake to 20%, according to research data by Counterpoint Research quoted by Reuters. Furthermore, Gizmolead pointed out that retailers sold 23.3 million smartphones during the third quarter in 2014, when in 2013, the amount of phones sold during the same quarter stood only at 12.8 million.


China’s Xiaomi is another big player and the company has been focusing more in India in the recent months. The company sold 61.1 million smartphones globally in 2014 and analysts expect Xiaomi to double its revenue this year.


Backed by Private Equity
The company is currently backed by private equity firms TA Associates and Sequoia Capital. The reports are stating the company has shortlisted both Morgan Stanley and Goldman Sachs to look after the offering, although there has so far been no official comment by any of the parties involved.


The possibility of an IPO isn’t the first time Micromax Informatics has played with the idea of listing to the stock market. In 2010, the company hired banks for a potential IPO with the hopes of raising $150 million. A year later, the company scrapped the idea saying the market sentiment wasn’t right.


Many market analysts believe the primary capital markets in India will experience more fundraising in the forthcoming year. The Economic Times interviewed Arun Kejriwal, the founder of brokerage Kejriwal Research and Investment Services Ltd., who told a number of private equity funds are interested in finding an exit this year.


It remains to be seen whether the company will go ahead with its IPO plan this time around. Overall, it looks like IPOs remain a popular option for private equity backed companies in 2015. The Telegraph reported on Sunday that market experts are looking forward to a busy listing period at the start of the year, especially at the London Stock Exchange.

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