LGS global - Ybrant digital reverse merger
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Printed Date: 21/Apr/2025 at 3:00pm
Topic: LGS global - Ybrant digital reverse merger
Posted By: srisaurabh2000
Subject: LGS global - Ybrant digital reverse merger
Date Posted: 11/Nov/2011 at 10:34pm
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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. |
Replies:
Posted By: subu76
Date Posted: 11/Nov/2011 at 10:47pm
| Do you know what is the catch? |
Posted By: TCSer
Date Posted: 11/Nov/2011 at 10:48pm
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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 |
Posted By: srisaurabh2000
Date Posted: 11/Nov/2011 at 11:18pm
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. |
Posted By: TCSer
Date Posted: 11/Nov/2011 at 11:26pm
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http://www.moneylife.in/article/hyderabad-based-companies-decimate-investors-wealth/21332.html ------------- 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 |
Posted By: srisaurabh2000
Date Posted: 11/Nov/2011 at 11:27pm
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. |
Posted By: srisaurabh2000
Date Posted: 11/Nov/2011 at 11:42pm
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. |
Posted By: srisaurabh2000
Date Posted: 11/Nov/2011 at 11:53pm
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Posted By: subu76
Date Posted: 12/Nov/2011 at 5:37pm
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Do you know if they had actually bought inmobi? I see that inmobi had been funded by Kleiner Perkins. That definitely sounds creditable. Given this why enter the stock market surreptitiously via a non descript company?  Also, wonder which banks are funding the loan The claim about being the second largest mobile ad network (after Google) does not seem right to me for sure.
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Posted By: srisaurabh2000
Date Posted: 12/Nov/2011 at 8:06pm
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No inmobi has not been bought. I gave those figures for comparison with Ybrant. Inmobi is one of the poster boys of Indian digital success. They claim that they are largest after google in mobile ad space and also they are the largest independant mobile ad network - http://www.inmobi.com/company/. Ybrant came later to the mobile digital ad network. But they are well entrenched in the web ad network with quiet prominent clients and ad agencies as clients. The point I was making is that inmobi has got a valuation of USD 1b. Ybrant based on CMP already is at USD 1b (considering 500m+ shares at Rs. 100+). How would the market value them? True reverse merger in most cases are suspect. But then there are cos. like Arshiya International who have taken this route. My sense is reverse merger is a faster option than IPO and also avoids some procedural hassles. Obviously the rogue cos. use it for other nefarious purposes. |
Posted By: photon
Date Posted: 13/Nov/2011 at 3:06pm
My 2 cents : Takes such claims with heap of salt. 1. What is the metric of comparisons here - Revenue or Impressions ? An ad network is only as valuable as the inventory (page views) it has. Inmobi is likely to have huge inventory in markets like India, Indonesia and other similar markets, which is far less valuable than that of other markets. 2. "Independent ad network" : A while ago all the biggies (Google, Apple) went ahead and bough some large mobile ad networks (Admob etc) which left them one of the large network which was not sold. Coming back to LGS : The ad network play is either of two: 1. Inventory - Lock-in over premium websites/pages : Here it is a mercenary market, unless someone owns or have a long term agreement with a website - the websites just go to the ad network which will generate best revenue. 2. Technology - How well you monetize an ad impression: Likes of Google, Facebook, Microsoft are far ahead in the game than most. So, at a $1B valuation I'll not want to touch this with a long long pole ! |
Posted By: srisaurabh2000
Date Posted: 13/Nov/2011 at 10:40pm
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1. My sense is that would be based on impressions. Inmobi is much more a global player. They started in US only last year and done well. That is probably one of the reasons the valuation has jumped significantly from last year. And from what I hear they are hiring previous google head in Europe and previous Microsoft head in Japan. Admob,iAds were more US players when they were bought which has been a dominant market. Admob was sold at $750m so obviously this would have led to rise in valuation of inmobi. Milennium media is coming with an IPO next yr. at $700m. For LGS, 1. They have tie ups with big brands over the world and also prominent ad agencies and have 2000 clients. They also have 1500 plus publishers including Facebook, google etc. and one of highest advertisers on Facebook. In Latin america they had acquired dream ad which does exclusive sales house for Microsoft Advertising. 2. It is a USD 68b industry which can grow to 100b by 2015. And anyways LGS uses all the prominent publishers so they should be better placed. Agree on the valuation part as this is speculative and as I mentioned that this is only a trading bet. There is no point in buying at this price and without Ybrant's financials avlb. |
Posted By: arebaba
Date Posted: 10/Feb/2012 at 2:10pm
| Does anyone know when the merger will be completed and new shares start trading? Tx |
Posted By: srisaurabh2000
Date Posted: 10/Feb/2012 at 11:02pm
Don't think these dates have been indicated yet. |
Posted By: arebaba
Date Posted: 17/May/2012 at 7:30pm
| I own Ybrant shares and am unable to get information on when they will be listed from the company. Do you have any information on the time line> Tx |