Amitabh Bachchan’s money grows 50-fold in JustDial IPO

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By HT

A small investment in a company he endorsed has multiplied in just two years for the Big B.

With telephone and Internet-based search company JustDial kicking off its initial public offering (IPO) on Monday, the value of its brand ambassador Amitabh Bachchan’s shares, R6.27 lakh when they were allotted in January 2011, has swelled to between R3 crore and R3.4 crore.

The IPO, which will close on Wednesday, was subscribed 50% on the first day, data from the National Stock Exchange showed.

According to JustDial’s red herring prospects, Bachchan was allotted 62,794 shares at a price of R10 each in January 2011. The company is issuing shares in the price band of R470-543 under the IPO.

Based on the higher price of R543, Big B stands to gain R3.4 crore and according to the lower price of R470, his gain is R2.95 crore.

“Somebody takes a risk by investing in a company pre-IPO when there is no liquidity. And that risk sometimes gets rewarded when the company goes for IPO. It can happen in equities and private equity,” said Rakesh Rawal, head, private wealth management at Anand Rathi Financial Services.

As for Bachchan, JustDial has used television commercials, bill boards and online ads featuring him in a big way to enhance its brand presence ever since it signed him as its brand ambassador. The company has spent in excess of R20 crore for advertising purposes in the last two years, according to estimates.

It is not just Amitabh Bachchan, a clutch of early investors private equity firm Sequoia Capital stand to gain from the JustDial IPO.

JustDial, founded in 1996 with an initital investment of R50,000, expects to raise R950 crore from the public issue.

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