Blume Ventures Portfolio Company E2E Networks Sees Positive Start to Public Trading
15 May, its first day on the SME trading platform aptly called Emerge, it started trading at 85 rupees, reached a high of 89.25 rupees, and closed at 89 rupees.
E2E stock showed promise as its IPO, started on 3 May and ended on 7 May, was oversubscribed by more than 70 times. The issue price was fixed at 57 rupees. Face value of a share was set at 10 rupees.
The total bid for shares in the IPO was 270,844,000, but public issue was 3,858,000. There was said to be no anchor allotment to the IPO. The non-institutional investors category had made the highest bids at 239,664,000.
Blume Ventures reported to have made a “stellar partial exit”, is said to have sold one third of its E2E Networks stake (around 743,000 shares).
Cofounder and a Managing Partner of Blume, Karthik Reddy tweeted:
“…price discovery at 85 Rs (IPO price 57 Rs) and then 5% circuit breaker
Stock at 89.25 with little trades and hardly any sellers :)”
The VC firm’s fund is listed as trustee of IL&FS Trust Company Limited (ILTC) in the list of shareholders offering up their shares.
According to Crunchbase, In June 2013, E2E raised a seed round of $80.4k from Blume. Prior to this in 2011, Blume was part of a $56.2k seed round which also included expat entrepreneur, Freeman Murray.
E2E was incorporated as a private company in 2009. From being a data hosting centre it moved into developing its own cloud computing technology in 2008 and started offering dedicated hosting in 2009. Ability to offer its own technology and cloud infrastructure makes services more affordable to consumers.
Demand for cloud services are rising in India with spending on such cloud hosting services possibly reaching $2 billion by 2020’s end, according to the IPO filing. Media reports say E2E recorded a 37.5 percent increase in revenue to reach Rs 29.3 crore by March 2017.
E2E founder Tarun Dua and wife Srishti Baweja, both promoters of the company, were expecting a valuation of around Rs 81.2 crore which was reportedly covered on second day of IPO.
The National Stock Exchange of India (NSE) is the largest stock exchange in India in terms of volumes since 1995. The Emerge platform was launched in 2012 to publicly list SMEs which show potential and are in need of reliable, favorable avenues of capital debt which they may not otherwise have access to. For startups there is EMERGE-ITP, a regulated market place which allows startups to list with or without an initial public offering (IPO).
Being listed will validate the SME in the eyes of future investors and employees. To be listed, the SME needs to show track record of at least 3 years, positive cash accruals (EBDT) from operations for at least two financial years and a positive net worth. Post –issue paid up capital (by face value) should be less than Rs 25 crore.
Emerge makes it easier for an SME to get listed with a minimum of 50 allottees (on the main board it’s 1000), directs the IPO marketing towards HNI and institutional investors, ensures shares are fully subscribed to with 15 per cent in the Merchant Banker books. In addition it makes the transition to the main board of the stock exchange seamless, where small companies may struggle to gain interest or sustain value. Listing first on an SME platform, growing with investors who show long term interest in the company, and then moving to the main board after reaching a serious size gives the company a better chance of competing with the broad based ‘big boys’ of the stock exchange.
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