D-Mart parent, security firm SIS eye IPO launch next month
Avenue Supermarts is planning to raise around Rs1,870 crore through its IPO, CX Partners-backed SIS is expected to raise around Rs1,000 crore
Mumbai: Avenue Supermarts Ltd, which runs the D-Mart store chain, and security services firm Security and Intelligence Services (India) Ltd (SIS), plan to go public next month, three people aware of the development said.
While Avenue Supermarts is planning to raise around Rs1,870 crore through its IPO, CX Partners-backed SIS is expected to raise around Rs1,000 crore, as per the draft red herring prospectus (DRHP) filed by the two companies and an earlier Mint report.
“They are targeting their launch in the second half of the month of February. The idea is that with the Union budget happening at the start of February, the markets will have stabilized by the end of the month and so that will be a good time to launch the deals,” one of the three people cited above said, requesting anonymity.
The firms are currently holding international roadshows to market their IPOs, the second person cited above said, also requesting anonymity.
Avenue Supermarts and SIS did not respond to emails sent on Tuesday seeking comment.
Fairwinds Private Equity-backed Shankara Building Products Ltd, a retailer of home improvement and building products, is also planning to go public in the coming days. On 12 January, Mint reported that the company was looking at selling shares to the public before the end of the current financial year.
Asia’s oldest stock exchange BSE Ltd is launching the first IPO of the year on 23 January. The exchange has priced its shares in a price band of Rs805-Rs806 per share. The BSE share sale will raise Rs1,243 crore at the upper end of the price band.
Twenty-six companies raised Rs26,493.8 crore through the IPO route in 2016, according to data from primary market tracker Prime Database. Twenty-one companies raised Rs13,614 crore in the previous year, the data shows.
Avenue Supermarts will use around Rs1,080 crore from the proceeds of the initial share sale to repay debt, according to its DRHP said. The company also plans to spend Rs366 crore to open new stores.
Avenue Supermarts, which opened its first D-Mart store in Mumbai in 2002, had 112 stores as of September 2016, covering an area of 3.4 million sq. ft across 41 cities in Maharashtra, Gujarat, Telangana, Karnataka, Andhra Pradesh, Madhya Pradesh, Chhattisgarh and the National Capital Region.
Avenue Supermarts revenue grew at a compounded annual growth rate (CAGR) of 35% from Rs4,702.3 crore in financial year 2013-14 to Rs8,606.1 crore in the financial year 2015-16.
It has hired Kotak Mahindra Capital Co., Axis Capital, Edelweiss Financial Services, HDFC Bank, ICICI Securities and others to manage the IPO.
The SIS IPO will see private equity firm CX Partners sell part of its stake in the company through an so-called offer for sale. The company will raise around Rs362 crore in primary capital to repay part of the company’s debt as well as to fund working capital requirements. The primary capital and offer for sale together will be worth around Rs1,000 crore.
SIS is involved in the business of private security services and facility management. It also provides cash logistics services and electronic security services.
CX Partners bought a 20% stake in the security services firm for Rs500 crore in 2012, valuing it at Rs2,500 crore.
SIS has hired Axis Capital, ICICI Securities, IIFL Holdings, Kotak Mahindra Capital and three other investment banks to manage the share sale.