India IPO Beckons: InMobi Founders Seize Majority Control in Landmark SoftBank Exit!

InMobi's founders are set to regain majority ownership by acquiring a substantial stake from SoftBank, a move that precedes the adtech company's planned India listing next year.

The founding team, including CEO Naveen Tewari, Abhay Singhal, Mohit Saxena, and Piyush Shah, is increasing their combined shareholding to over 50% by purchasing a 25-30% stake from SoftBank. This acquisition, financed by $350 million in dollar-denominated debt raised from Värde Partners, Elham Credit Partners, and SeaTown Holdings, marks a significant shift in the company's ownership structure.

SoftBank's Exit

• SoftBank, which initially invested in InMobi in 2011, is expected to receive approximately $250 million from this transaction.
• The Japanese investor's stake will reduce from around 35% to 5-7%, ensuring they do not carry the "promoter" tag, a crucial aspect for Indian listing compliance.
• SoftBank had invested an estimated $200-220 million over the years.

Deal Valuation and Financing

• The buyback is reportedly struck at a valuation of under $1 billion, reflecting a more conservative market outlook for tech IPOs.
• The $350 million debt facility includes $250 million for the SoftBank stake purchase and $100 million for general corporate purposes, potential acquisitions, and strategic initiatives.
• Founders are pledging a portion of their holdings, a common practice for late-stage startups preparing for public markets.

Preparing for India Listing

• InMobi is also planning to redomicile from Singapore back to India, aligning with regulatory and investor ecosystems for domestic listings.
• With majority ownership restored and governance simplified, the founder-led group is positioning the company for its long-awaited public market debut.
• The move also sees total shareholding between founders and employees, including ESOPs, rise to around 80%.

Impact

• This strategic move empowers InMobi's founders, strengthens their control, and simplifies governance ahead of a crucial India IPO.
• It signals renewed confidence in InMobi's prospects and the Indian tech startup ecosystem.
• For SoftBank, it represents a profitable exit from one of its early major bets on India's digital landscape.
• Impact Rating: 7/10

Difficult Terms Explained

• Adtech: Advertising Technology. Refers to the technology used for delivering advertisements, particularly online.
• Majority Control/Ownership: Holding more than 50% of the voting shares in a company, allowing the holder to make key decisions.
• IPO (Initial Public Offering): The process by which a private company offers its shares to the public for the first time, becoming a publicly traded company.
• ESOPs (Employee Stock Ownership Plans): Plans that give employees the opportunity to own shares in the company they work for.
• Dollar-denominated debt: Loans that are denominated or specified in United States dollars, meaning they are repaid in dollars.
• Redomicile: To transfer the legal registration or domicile of a company from one country to another.
• Promoter Tag: In India, an individual or entity holding 20% or more of a company's shares and having control over its management. Regulatory norms often require disclosure or specific actions for entities tagged as promoters.