Rediff.com, one of India's leading web portals, hopes to raise $75 million in an initial offering of American Depositary Receipts on the US Nasdaq to expand its content and finance advertising, acquisitions and investments, according to a filing with the US Securities and Exchange Commission.
The Mumbai-based company did not disclose how many ADRs it plans to offer, nor the price. It said each ADR will be equivalent to one Rediff share. Rediff was formed in 1996 and provides information, e-mail, chat-rooms, job search sites and educational tools. The company also sells books, movie tickets, music and other products online.
Even though it is one of the most popular portals in India, with some 60 million page views a month, the Indian portal market is becoming over-crowded and competition is increasing, analysts say. To maintain its lead, Rediff must pay a price.
"This traffic is achieved with a large number of personnel and a great deal of advertising," said Merrill Lynch internet analyst Matei Mihalca in a recent report. While the company has increased its content through acquisitions and partnerships, Mihalca says he "continues to harbor doubts about the viability of its business model."
Rediff originally planned to target its services to non-resident Indians. As internet use in India increases however, it has altered its strategy to appeal to the domestic market.
