India's Hottest Web Site Eyes U.S. Listing
Bloomberg News, May 19, 1999
Rediff.com , India's biggest Web site, which serves up everything
from the hottest new Hindi movie soundtrack to recipes for chicken
masala to about one million users each month, has its sights set on
a Nasdaq listing.
The company, which allows users to shop for Indian music and
books and even look for a mate, has yet to make a profit and
doesn't expect to for at least three years. Still, it's looking to ride
Nasdaq's Internet mania, which has seen other loss-making
companies like Amazon.com Inc. chalk up a market capitalization of
more than $21 billion.
"The Indian user base is growing dramatically, (and) we may be
ready later next year to do a simultaneous listing on the Nasdaq
and the Indian markets," Chairman Ajit Balakrishnan said in an
interview.
The move could help propel India's Internet market and raise the
numbers of visitors at Rediff.com , which counts Intel Corp. and
New York-based venture fund Warburg Pincus & Co. among its
shareholders.
The company says that while the number of Internet users is still
small in India, it's expected to increase five-fold to five million in
the next two years. Also, more than half of Rediff's users are
Indians living overseas, who are more likely to plug into the Net.
About 45 percent of Indians on line visit the site created three
years ago, Balakrishnan said.
Rediff will join other Asian companies such as Travel.com.au, a
travel site in Australia, and Pacific Internet Ltd., a Singapore
Internet service provider, that have capitalized on the Internet
craze in the stock market. The companies have good stories to tell,
with demand for services, entertainment and communication on the
Internet soaring as the world's most populous region gets wired.1/3
The number of Internet users in Asia outside of Japan will expand
35 percent a year until 2003 to reach 57.5 million customers,
market researcher International Data Corp. or IDC said. IDC
estimates that the Internet commerce market in Asia excluding
Japan will climb to $32.6 billion by 2003 from $724 million last year.
Among the region's markets, Australia is the biggest with $432
million in Internet commerce transactions last year, said Richard
Jacobson, an IDC analyst in Kuala Lumpur. IDC predicts that China
and India will lead the market in 2003 with the number of Internet
users.
To be sure, Rediff can expect competition from similar sites aimed
at Indians like the employment site Naukri.com and indiaworld.com,
not to mention global net leaders such as Yahoo!, which plans to
launch a site for Indians. Also, with only two phone lines for every
100 people and only one Internet user for every 950 people in the
country of about a billion, India is still only a tiny part of the World
Wide Web.
What's more, "computer penetration in a lot of Asian countries is
relatively low and in some markets, the Internet industry has been
quite protected," said David Leow, associate director at HSBC
Securities (Singapore) Pte.
Still, investors are willing to bet that profits for the likes of Rediff
may not be too far away. With more than 80 million hits a month
and growing revenue from advertising and on- line product sales,
investors say they would like to buy a piece of Rediff's potential.
"We'd be interested," if the price is right, said Simon Holdsworth,
who helps manage more than 500 million rupees ($12 million) as the
managing director of ITC Threadneedle AMC Ltd. in Mumbai.
The vote of confidence from foreign investors Intel, the world's
biggest computer microprocessor maker, Warburg Pincus, and a
company called Draper, which together own as much as 39 percent
of Rediff, is also likely to help.
Rediff said it will continue to get more than 40 percent of the
Indians on the web to visit its site by giving them information,
products and services they want.
That means Rediff's sports pages and chat rooms highlight the
country's No. 1 sport, cricket, not soccer. It means payments for
cassette tapes or movie tickets ordered on line are made by
checks, not by credit cards. And it means that if someone finds the
right Hindu partner through personal ads on the site they can ask
the on-line astrologer to choose an auspicious day for a wedding.