HomeShop18 Eyes $100M US IPO

Indian media group Network 18 is moving towards a US listing of its wholly owned online retail arm, HomeShop18, that could raise about $100 million, two sources with direct knowledge of the matter said.

The group is in talks with institutional investors, including private equity firms, to take up shares as part of the listing plan, said the sources, who declined to be identified as the talks are not yet public.

"The process has just begun. We are in talks with bankers and investors," said one of the sources.

Indian online retail firms are raising capital to position themselves for rapid growth of the country's fledgling $10 billion online commerce market as rising incomes and aspirations to own big brands at discounted rates push a time-constrained working middle class to shop from the comfort of their homes.

"We have ambitions to get listed and are open to it but it is premature to talk about it now. We cannot give any timeframe on that at the moment," Sundeep Malhotra, founder and chief executive of the company, told Reuters.

Between 2007-2008, HomeShop18 raised $26 million from private equity fund SAIF Partners in two tranches and in 2009 it raised $18.5 million from South Korean home shopping retailer GS Home Shopping.

Flipkart.com, the country's top online retailer, has held talks with foreign private equity firms to raise $150 million by offering a minority holding in the company.

In 2010, Indian online travel booking firm makemytrip.com raised $100 million through a U.S. listing.

Pitfalls

But the country of 1.2 billion people, the second-most populous in the world, is also facing infrastructure bottlenecks that can impede the industry's growth.

India has only 52 million active Internet users and only 40 per cent of them have shopped online, according to the Internet and Mobile Association of India. Fewer than 18 million people use credit cards, and most of them shop offline, the association said.

HomeShop18, with current revenue of 7.5 billion Rs ($142.13 million), sells everything from mobile phones, laptops and televisions sets to apparel and lifestyle products.

It plans to set up warehouses with a size of 1 million square feet and is in the process of carrying out internal evaluations, Malhotra said.

The company's warehouses are currently in the range of 300,000-400,000 s quare feet.

"We will focus on investments in technology and operational capabilities like a strong and efficient backend...We are hoping our business will be three times the current size in the very next year," Malhotra said.