Back in 2000 when mobile value-added (VAS) services player OnMobile Global was setting up its base in the Silicon Valley, California, it encountered a peculiar situation. Being a start-up, it was conservative on spending but wanted a proper office space. Luckily, there was a landlord who was willing to accept equity in lieu of cash. “That is the beauty of the Valley area. There you get to meet such people who are willing to back you by taking equity against cash,” co-founder and chief technology officer Mouli Raman said. On the eve of the company going public, the landlord Cornerstone Properties is staying invested and has seen the value of its 0.4% holding in OnMobile’s holding company become several times the actual rent he would have received.

OnMobile’s holding company OnMobile Systems Inc has a 61% stake in it. Incubated out of Infosys, OnMobile is India’s largest VAS player and now ready for a life of its own. Besides the landlord, also delighted are a clutch of private-equity investors who have seen the valuation of their holding rise by over 15 times in the past seven years. In 2000 when OnMobile raised $13 million in round one of funding, it was valued at under $40 million. Today, at the upper end of its Rs 425-450 band at which 11 million shares each are offered at, the company’s valuation would stand at over $600 million.

With OnMobile’s listing, Indian VAS players would come of age and have a valuation benchmark. OnMobile’s IPO includes about 9 million fresh shares and 2 million offer of sale from existing shareholders. Infosys, which has about 15% economic interest in OnMobile, is also staying invested. Some funds like Argo Global Capital and Satwik are exiting. OnMobile was an early experiment of Infosys when it encouraged promising ideas of its employees by incubating them. Although it didn’t hand out any seed capital, Infosys provided infrastructure and manpower support, and took a minority stake in the venture.

Yantra, another of Infosys’ incubation company where it held a 16% stake, was sold in 2004 at a valuation of $170 million. Arvind Rao, OnMobile co-founder and chief executive, said: “Nandan (Nilekani, Infosys co-founder) and I studied at IIT Bombay. I was in the investment banking side and he talked about the product company he was incubating. I met Mouli (Raman, who then headed Infosys’s internet products group) and we clicked and that’s how OnMobile happened.” Mouli, who was among the first 50 Infosys employees when he joined the then fledgling company in 1988, and few other Infosys engineers then left to form what today is India’s largest VAS company employing over 900 people.

Subsequently OnMobile underwent two more rounds of funding, raising little under $50 million. And as it goes public, Moulirecollects that they had prettymuch run out of all their seed fund by 2002 when it decided to tap India as a market, against its earlier efforts of cracking open the US market. It hit pay dirt with Orange (now Vodafone) account which till today continues to remain its biggest customer. Currently, it operates in 11 international markets and numerous telecom service providers.