In 2011, Fairwinds had invested around ₹ 120 crore in Bengaluru-based Shankara, a manufacturer, distributor and retailer of a wide range of steel products, ranging from tubes, flat and long products to welding rods, decorative fabrication products and roofing solutions.
Fairwinds PE was launched in 2013 by Ramesh Venkat, a former chief executive of Reliance Equity Advisors, the PE arm floated by Anil Ambani’s Reliance Group. The fund was renamed following a management buyout.
Currently, Fairwinds Asset Managers Ltd manages Reliance Alternative Investments Fund Private Equity Scheme I, a $200-million fund raised in 2009-10.
“This is the second time they (Shankara) are planning to go public. The company had filed a draft red herring prospectus (DRHP) in 2007 end, but had later dropped the plan to go public," said one of the three people cited above, requesting anonymity as the talks are private.
Shankara has hired IDFC Securities Ltd and HDFC Bank to manage the IPO, he added.
“The major objective of the IPO is to provide a part exit to Fairwinds, which has been invested in the company for almost five years now. Hence, the IPO will be mix of primary fund raise and an offer for sale by Fairwinds to sell around half of its stake in the company," said the second person cited above, also requesting anonymity.
Fairwinds held a 34.78% stake in the company as of 31 March 2015, according to data from the company’s filings with the Registrar of Companies (RoC).
According to data from the RoC, the company registered a revenue of ₹ 1,979 crore in the financial year 2014-15, compared to a revenue of ₹ 1,927 crore in the previous year. In 2014-15, it registered a profit of ₹ 23 crore, as against a profit of ₹ 29 crore in the previous year.
The latest financial numbers were not available with the RoC.
Emails sent on Friday to Venkat, founder and managing partner of Fairwinds, and Sukumar Srinivas, chairman and managing director of Shankara Building Materials, went unanswered. IDFC Securities and HDFC Bank too did not respond to emails.
Shankara, founded in 1995, has around 7.58 lakh sq. ft of warehousing space for its distribution and retail operations. The company has 21 distribution locations and 89 retail outlets.
Shankara’s retail network has a presence in Andhra Pradesh, Goa, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Puducherry, Tamil Nadu and Odisha.
Shankara’s IPO plans come at a time when Fairwinds has been focusing on exiting several of its portfolio firms.
The move also comes at a time when the Indian primary market is witnessing a strong run of IPOs, a trend that has helped several private equity firms exit their companies through the public markets.
In the first seven months of the current year, around 14 companies have raised ₹ 9,830.4 crore through IPOs, according to data from primary market tracker Prime Database.
In 2015, 21 companies had hit the primary market with the public offers raising ₹ 13,614 crore, data shows.
“Till a couple of years ago, exits had been a major concern for private equity funds in India. The buoyancy seen in the primary markets in the last 18 months has resulted in several private equity funds looking at public markets as an exit route for their mature investments," said Bhadra Kanaiya, executive director at investment banking firm Euromax Capital.