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Excl: Homsehop18 looking to raise $50M in pre-IPO funding

TV18 Home Shopping Network Ltd, a teleshopping and e-commerce firm of the Network18 Group that runs operations under the Homeshop18 brand, is looking to raise $50 million in pre-IPO funding and has appointed an international bank to help it find investors, sources told Techcircle.in. The development comes as a precursor to its proposed public issue.

When contacted by Techcircle.in, HomeShop18 said, “TV18 Home Shopping Network Holdings is a growing business and is continually assessing financing alternatives and the needs of its operations. We do not make these assessments public.”

The pre-IPO fundraising would be closely watched as it would also provide a valuation hook for the firm at its proposed public issue at a time when PE and VC investors are turning cautious about the e-commerce sector. The proposed public issue would make SAIF Partners-backed HomeShop18 the first horizontal e-commerce firm in India to go public. At present, MakeMyTrip, an online travel agency, is listed in the US. Interestingly SAIF Partners is also an investor in MakeMyTrip.

Revenues

HomeShop18 registered 134 per cent rise in revenue to Rs 30 crore during Q4 FY12 over the year-ago period. Sequentially, its revenues rose around 41 per cent, compared to Q3 FY12. For the full year ended March 31, 2012, HomeShop18 recorded revenues of Rs 89.6 crore, compared to Rs 71.4 crore in the previous year. But the pain point for the business lies in the fact that its net loss more than doubled to Rs 107.2 crore, compared to Rs 50.9 crore for the year ended March 31, 2011. This also implies that the loss of the company was more than its revenues.

Funding

In July last year, the company raised Rs 100 crore from its existing investors SAIF Partners, Network18 and GS Shopping, following which it acquired Coinjoos.com, an online bookstore.

SAIF was the first institutional investor in the company and it had provided the firm with startup capital back in 2006. In 2008, Capital 18 Fund, a private investment vehicle from Network18 Group, acquired 75 per cent stake in the company for $21 million, making it a 75:25 joint venture with SAIF. In the following year, GS Home Shopping Inc., along with Network18 Media & Investments Ltd, put $23.5 million into the company.

IPO grapevine

In April this year, news agency Reuters reported that Network18 was moving towards a US listing of HomeShop18 that could raise about $100 million. “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, CEO of Home Shopping Venture, told the news agency at that time.

Last week, NextBigWhat reported quoting sources that the firm has filed its documents for “confidential” IPO at the NASDAQ.

(Edited by Sanghamitra Mandal)

4 Comments

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Ashwin November 23, 2012 1:03

How can a TV/ecommerce company have a net loss of 100cr on revenue of 90cr? Is that correct info?

Vivek Sinha November 23, 2012 12:05

Ashwin any logical reason why this can’t be true?

It starts simple, you burn more cash than revenues you are generate (actual revenues does not necessarily mean sales as we know it, so gross sales is different in trading and retail sector, the actual revenue is the commission you get from selling… say an iPhone.. this commission varies from product to product and usually higher for apparel & lifestyle segment).

E-com firms spend money in buying stuff from vendors and pay salaries etc and then make it up from whatever they sell (well, ya the actual business premise is the other way round). If the inventory piles up (as good as saying you anticipated to sell more and stocked and couldn’t sell or conversely wanted to give good customer experience and stocked up despite impending loss so that customer orders are met quickly) and or you have hired high cost personnel.. your expenses goes up but it may not reflect in revenues and if this gap is sufficiently big.. net loss can balloon to a point (as in this case) which is more than revenues. Unfortunately the parent firm does not give detailed financials of this entity so we don’t know the main reason for this (which could be either high inventory or high personnel cost or even high interest costs).

Sherlock Holmes November 26, 2012 10:54

Homeshop18 being a marketplace is only reporting the net revenue and not the GMV. Thus loss seems higher. In case they would have reported GMV of product sold and assuming they have 20% product margin, they did sales of 450crs.

I believe loss of 100 crore on sales of 450 crores is how you should look at them if you are comparing with other e-comm companies.

Btw as Vivek mentioned companies can easily make a loss>sales also.

Raj November 26, 2012 13:26

Sherlock:
HS18 is not a marketplace.
Raj

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