S. Chand and Co to launch IPO on 26 April
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Mumbai: S. Chand and Co. Ltd, a publisher of educational books, on Wednesday announced that it will launch its initial public offering (IPO) on 26 April.
The company has fixed a price band of Rs660-670 per share for its initial share sale. The offer will close on 28 April.
Everstone Capital-backed S. Chand delivers content, solutions and services across the education lifecycle, serving the K-12, higher education and early learning segments.
The firm has appointed investment banks JM Financial Institutional Securities Ltd, Axis Capital Ltd and Credit Suisse Securities (India) Pvt. Ltd to manage the share sale.
It had filed its draft IPO prospectus with markets regulator Securities and Exchange Board of India (Sebi) on 16 December and received approval in early March.
The IPO will see the company raise Rs325 crore in primary capital. Additionally, existing shareholders of the company, including Everstone Capital, will collectively sell around 6 million shares worth Rs403.5 crore, taking the total IPO size to Rs728.5 crore. Everstone holds 32.27% stake in the company.
Out of the primary proceeds, the company will spend Rs255 crore to repay debt, said Samir Khurana, group head, strategy and investments at S. Chand.
S. Chand is looking to repay loans availed by it and its subsidiary Eurasia Publishing House Pvt. Ltd, which were utilized towards funding the acquisition of Chhaya Prakashani Pvt. Ltd. The company will repay some loans availed by other subsidiaries such as New Saraswati House (India) Pvt. Ltd and Vikas Publishing House Pvt. Ltd.
In December 2016, S. Chand acquired 74% stake in Chhaya Prakashani adding four Chhaya brands to its portfolio.
As of 31 December, the company offered 55 consumer brands across knowledge products and services including S. Chand, Vikas, Madhubun, Saraswati, Destination Success and Ignitor.
Inorganic growth through acquisitions is a strategy that S. Chand has frequently preferred in the past too.
In financial year 2012-13, S. Chand acquired Vikas Publishing to bolster its offering in Hindi titles, while in the financial year 2014-15, it acquired New Saraswati House.
“We will continue to look to grow through the inorganic growth route in the future too. The company has spent close to Rs460 crore on acquisitions in the past,” said Khurana.
Apart from the acquisitions, S. Chand has also invested around Rs33 crore to acquire minority shares in early-stage digital education companies, said Khurana. “We will continue to assess such investments in digital platforms,” he added.
According to its red herring prospectus, S. Chand recorded consolidated revenue of Rs540.6 crore in 2015-16, against Rs478.5 crore in the previous year. In 2015-16, it reported a profit of Rs46.6 crore against Rs32.7 crore the previous year.
The company’s consolidated revenue has grown at a CAGR of 33% over the past five financial years, from Rs174.6 crore in fiscal 2012 to Rs540.6 crore in fiscal 2016.
According to Khurana, the company’s revenues are seasonal and almost 75% of it comes in the fourth quarter due to the large contribution of the K-12 business segment where sales of new books occur in the January-March quarter ahead of the start of the new academic year.
So far this year, five firms have raised Rs4,185.91 crore through the IPO route, according to data from primary market tracker Prime Database. In 2016, 26 firms raised Rs26,493.8 crore through IPOs, data shows.