Shares of Just Dial slipped 5% to Rs 1,021 on BSE in intraday trading on Monday after Reliance Retail Ventures (RRVL) announced the acquisition of 40.95% in the leading engine company of local search of the country for a total consideration of Rs 3,497 crore. RRVL made an open offer for a 26% stake at Rs 1,022.25 per share.
RRVL will hold a 40.95 percent stake through a preferential grant (25.33 percent) and the acquisition of shares from existing promoters (approximately 15.62 percent). RRVL will obtain a 25.33% stake in the company via a preferential allocation of 21.2 million shares at a price of Rs 1,022.25 per share.
In addition, the company will acquire a 15.62 percent stake (13.1 million shares) from VSS Mani (existing promoters) at a price of Rs 1,020 per share.
The transaction is subject to customary closing conditions and approvals by shareholders and others.
“The capital infused by RRVL will help drive the growth and expansion of Just Dial into a comprehensive local commerce and listing platform. Just Dial would expand discovery on its platform and improve transactions for millions of products and services. These investments will leverage Just Dial’s existing database of approximately 30.4 million ads and its existing consumer traffic of approximately 129.1 million unique quarterly users (as of March 31, 2021) ”, Just Dial said in a press release.
This, coupled with a change in promoters and a shift from advertising to digital medium, bodes well for the company in the long run, ICICI Securities said in a note.
Reliance Retail Ventures is a subsidiary of Reliance Industries Limited (RIL) and the holding company for all retail companies in the RIL group. Reliance Retail is the largest and most profitable retailer in India with the broadest reach.
Just Dial is the leading local search engine platform in India providing search related services to users across India through multiple platforms such as websites, apps, phone and SMS. Just Dial had around 30.4 million ads and 129.1 million unique quarterly users across web, mobile, app and voice platforms as of March 31, 2021. The company recently launched its B2B marketplace platform, JD Mart, which aims to empower millions of Indian manufacturers, distributors, wholesalers and retailers to prepare for the internet in the post-COVID era, obtain new customers and sell their products online.
In the long run, Justdial’s JD and JD Mart platforms are likely to be the primary beneficiaries of the growing adoption of the Internet by SMEs to bring their businesses online, attract customers and effectively run their businesses through the use of of technology.