Bharat Matrimony.Com IPO & Online Match Making Industry

India’s largest online matrimony site Bharat Matrimony has filed its draft red herring prospectus (DRHP) to float its initial public offer. The company is looking to raise Rs 3500 mn ($54 mn) with issuance of 1.66 mn shares through a fresh issue along with partial exit from existing PEs/founder’s family. The proceeds will be used for 1) advertising and business promotion activities (Rs 1500 mn: spread over 3 years); 2) Purchase and development of office premises in Chennai (Rs 344 mn); 3) Repayment of overdraft facilities (Rs 287 mn) and 4) Procurement of hardware/software for a centrally controlled contact center (Rs 174 mn).

The online matchmaking industry is still at a nascent stage and accounts for approximately 4% of marriages in India. The online matchmaking industry in India is a very fragmented market with over 2,600 wedding portals. However, only a handful of players have scale and 700 portals are an extension of the community bodies which traditionally played a major role in matchmaking. Based on Online Matchmaking Report, the population within the marriageable age bracket in India will grow at an average rate of 0.92% until fiscal 2020 and it is estimated that approximately 71 million marriages will take place in India from fiscal 2015 to fiscal 2020 (both years included). Increase in Internet penetration is expected to translate into an increased user base for online matchmaking services. Approximately 89% of marriages in India are arranged.

Bharat Matrimony thinks that its micro-market strategy differentiates them from other players and enables to grow in a fragmented and unorganized industry. Matrimony.com’s business comprises three segments – matchmaking services, marriage services and related sale of products and other services which include the mobile-only relationship app, Matchify. The company delivers matchmaking services to users in India and Indian diaspora through websites, mobile sites and mobile apps.

Bharat-Matrimony (Matrimony.com) is No 1 player in the online matrimony space with Infoedge’s subsidiary being No 3. With most of the proceeds from IPO being potentially used for ad/business promotion we expect the gap between No 1 and No 3 to widen unless Jeevansathi also increases its marketing investment.