Varroc Engineering IPO to launch on 26 June

Mumbai: Auto component maker Varroc Engineering Ltd on Tuesday said it will launch its ₹ 1,955 crore initial public offering (IPO) on 26 June.

Varroc Engineering, backed by Tata Opportunities Fund, has fixed a price band of ₹ 965-967 per share. The public offer will close on 28 June.

The Varroc Engineering IPO will be a pure sale of shares by the promoter and investors. The company does not intend to raise any fresh capital for investing in its business.

At the upper end of the price band, the selling shareholders will fetch ₹ 1,955.4 crore, with the promoter, Tarang Jain, fetching ₹ 169.4 crore. Jain holds a 46.35% stake in the company. Tata Opportunities Fund will make a complete exit from Varroc Engineering. It owns a 12.55% stake in the company and stands to make ₹ 1,635.8 crore from the IPO. The fund had invested ₹ 300 crore in 2014.

Another Tata entity, Tata Capital Financial Services Ltd, will also sell its entire 1.15% stake in the company. Tata Opportunities Fund’s exit from Varroc will be among the largest IPO exits by any private equity firm in India.

Investment banks Kotak Mahindra Capital Co Ltd, Citigroup Global Markets India Pvt Ltd, Credit Suisse Securities (India) Pvt. Ltd and IIFL Holdings Ltd are managing the Varroc share sale.

The other major IPO exits witnessed in the Indian primary markets include ChrysCapital’s ₹ 1,347 crore share sale in Eris Lifesciences Ltd, Actis’s ₹ 910 crore exit from Endurance Technologies Ltd and IFC’s ₹ 810 crore share sale in Bandhan Bank Ltd.

Goldman Sachs’s proposed stake sale in the IPO of renewable energy producer ReNew Power Ltd is expected to be at $600-650 million, Mint had reported on 27 May.

Varroc designs, manufactures and supplies exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off highway vehicle manufacturers worldwide.

Between FY2016 and FY2018, Varroc’s revenue grew at a compound annual growth rate of 12.37%.

Varroc has not shied away from growing through inorganic opportunities.

In 2012 it acquired Visteon’s global lighting business, now known as Varroc Lighting Systems. In 2007, Varroc acquired I.M.E.S (a manufacturer of hot steel forged parts for the construction and oil and gas industries) in Italy and in 2011 it acquired Triom (a manufacturer of high end lighting systems for global motorcycle brands) with operations in Italy, Romania and Vietnam.

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