Topic: LGS global - Ybrant digital reverse merger Posted: 11/Nov/2011 at 10:34pm
LGS global is a small Hyd based IT firm.
In a reverse merger, they are buying out Ybrant digital valued at Rs. 2,500 cr. The mcap of LGS global is 230 cr. at CMP 97.25.
LGS Global has 25.4 million outstanding shares and last month the promoters of the the listed firm subscribed to another 30 million shares. Total shares to be issued to Ybrant shareholders would be around 450 million giving them 89 per cent of the combined entity at a deal price of Rs 55 a share.
The swap would be 6 shares of Ybrant for 1 share of LGS. The promoters of Ybrant digital hold 40%, remaining is held by ICICI Ventures, GE Capital, Oak Partners. There are plans of raising Rs. 1,500 cr. by debt to buy out funds which would like to exit.
Ybrant digital is one of the few digital cos. from India which have expanded globally. They offer digital advertising solutions and one of the highest ad generators in Facebook and are an official FB marketing API partner. They serve who's who of brands and also most of the significant online publishers
They also own independant properties like lycos, gamesville, travel sites in Australia.
They also offer mobile marketing services. Inmobi a mobile ad network was valued at USD 450m in a deal with Softbank Japan. Inmobi claim they are second to Google in this space and first as an independant. Inmobi is an amazing success from India which has gone global. Ybrant also is quiet amazing.
Current valuation for Inmobi is supposed to be USD 1b(Rs. 5000 cr). Flipkart with a revenue of Rs 100 cr. has been USD valued 1b based on latest news going around.
Some relevant links: http://www.vccircle.com/500/news/ybrant-digital-to-merge-with-bse-listed-lgs-global http://www.vccircle.com/500/news/ybrant-digital-raises-48m-from-oak-india-others http://www.ybrantdigital.com/news/080609-ybrant-plans-to-acquire-an-affiliate-marketing-company.htm http://www.medianama.com/2010/08/223-why-ybrant-bought-lycos-plans/ http://www.medianama.com/2011/01/223-ybrant-raises-48-million-acquisition-expansion-plans/ http://www.thehansindia.info/News/Article.asp?category=1&subCategory=8&ContentId=17832
At CMP of 100+ this already is at a valuation of USD 1b. Views/more info invited specially for such reverse merger cases.
I hold this as a trading bet and I have a vested interest. This has run up significantly in the past few days.
Joined: 17/Mar/2008
Location: India
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Posts: 1882
Posted: 11/Nov/2011 at 10:48pm
BIGGEST problem is that Its another Hyderabad based firm. Tanla,Mic,,,,bartronincs,satyam, icsa,lanco,GVK,GMR,IVRCL,NCC ,SEND SHIVERS ONE SPINE
Share market is nothing but a game of temperament. Success mantra Right Price,Right Business,Patience, Conviction .Do not do panic buying or selling.It may be the only profession where inactivity pays
Ybrant wanted to do an IPO in 2007 which did not work out. Again earlier this year they had indicated an intent to get listed.
LGS is a cheap services co. which probably was available and hence the deal would have worked.
Ybrant has grown by acquisitions also and hence listing would probably help them in future acquistion needs. e.g. they had bought lycos at USD 36m last year, they had acquired a minority stake in Israel's Web 3.0.
Share market is nothing but a game of temperament. Success mantra Right Price,Right Business,Patience, Conviction .Do not do panic buying or selling.It may be the only profession where inactivity pays
BIGGEST problem is that Its another Hyderabad based firm. Tanla,Mic,,,,bartronincs,satyam, icsa,lanco,GVK,GMR,IVRCL,NCC ,SEND SHIVERS ONE SPINE
There are more like GTB, SKS microfin, Ramky.Apart from SKS microfin, as far as I know all had political involvement and hence clearly a no-no. SKS btw had given a good profit at IPO.
This is also not clearly an investment stock unless Ybrant's numbers are known. Also a 1500 cr. debt is being lined up for any funds that may want to exit which adds to the risk.
But again this is a trading play as of now.
Please note that Ybrant, inmobi are well known cos. for people who keep track of technology and VC community. Also, after the deal goes through the promoters would hold 90% + stakes (6/7 held by Ybrant folks and 50% of 1/7 of LGS global promoters). So any issues would mean the promoters lose more. 60% of stake currently in Ybrant is held by Oak Partners, GE Asia Capital, ICICI Ventures.
Like I mentioned Flipkart has a valuation of USD 1b on sales of Rs. 100 cr. sales. And hence here the risk is always there more than a typical investment.
This is due to a structural issue in Andhra. In the 70s the politicians had rued the absence of Marwari like business community here. They had then started political patronage to the Reddy folks, rice traders and ilk, giving easy access to money and resources. Even in loan default these folks were let off. All these GVK, GMR, Satyam etc. were result of this.
BTW the lady who broke the Harshad Mehta story never indicated who her source was. And guesses are there who would have got hurt with Harshad Mehta's rise? There are journalists who demand money from rogue cos. not to break stories.
Also, you should not miss that there are Hyd cos. like DRL, Apollo Hospitals, Kaveri Seeds, Avanti Feeds which have done well.
BIGGEST problem is that Its another Hyderabad based firm. Tanla,Mic,,,,bartronincs,satyam, icsa,lanco,GVK,GMR,IVRCL,NCC ,SEND SHIVERS ONE SPINE
There are more like GTB, SKS microfin, Ramky.Apart from SKS microfin, as far as I know all had political involvement and hence clearly a no-no. SKS btw had given a good profit at IPO.
This is also not clearly an investment stock unless Ybrant's numbers are known. Also a 1500 cr. debt is being lined up for any funds that may want to exit which adds to the risk.
But again this is a trading play as of now.
Please note that Ybrant, inmobi are well known cos. for people who keep track of technology and VC community. Also, after the deal goes through the promoters would hold 90% + stakes (6/7 held by Ybrant folks and 50% of 1/7 of LGS global promoters). So any issues would mean the promoters lose more. 60% of stake currently in Ybrant is held by Oak Partners, GE Asia Capital, ICICI Ventures.
Like I mentioned Flipkart has a valuation of USD 1b on sales of Rs. 100 cr. sales. And hence here the risk is always there more than a typical investment.
Also the founder of Ybrand is an alumni of IIT KGP and has done MS at Iowa State Univ if that makes diff.
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