The non-promoter holding in Varun Beverages, the world's second-largest PepsiCo bottler, will be 25-26% after the initial public offering
Mumbai: Varun Beverages Ltd, the world’s second largest PepsiCo Inc. bottler, said it plans to raise as much as Rs1,400 crore through an initial share sale and plans to complete the process by next month end.
“We have just completed our road shows, meeting with investors all over the world and the response has been very good," said Ravi Jaipuria, chairman of RJ Corp., the parent of Varun Beverages.
The company filed its draft share sale documents with the capital markets regulator in June.
Once the initial public offering (IPO) is completed, the non-promoter holding, including private equity investors and the public, will be 25-26% in the PepsiCo bottler.
Varun Beverages will use the money raised to reduce debt, said Raj Gandhi, president and group chief finance officer.
Currently, the debt-to-equity ratio is about 2, which will reduce to 1 post the IPO, said Gandhi.
The company has bank debt of Rs1,450 crore and Rs623 crore of deferred payment obligation towards PepsiCo Inc. for territory acquisition in north India last year, Gandhi said.
For the six months to June, Varun Beverages reported a profit of Rs209 crore on a revenue of Rs2,530 crore. The first half of the year is usually better than the second half on higher consumption of cold drinks during the summer.
“Investors are willing to bet on the India consumption story and are keen on investing in consumer stocks, but the interest is not across all categories of consumer sector," said Dhanraj Bhagat, a partner at Grant Thornton India LLP. “Investors are looking for consumer stories with differentiated business models, robust financials and strong growth potentials."
Varun Beverages is a distributor of PepsiCo products in north and east India and the largest bottler for the US-based beverage maker in South Asia, with operations in India, Nepal and Sri Lanka. Globally, it’s the second largest bottler of PepsiCo beverages, behind Tingyi Holdings Corp. of China.
The IPO will consist of a sale of 15 million new shares and an offer for sale of as many as 10 million shares by the Jaipuria family, the company had said in June.
The Varun Beverages IPO comes at a time when several consumer sector companies are looking to tap the primary markets to raise funds or provide an exit to their private equity investors.
In the past 18 months, 38 companies have raised almost Rs25,500 crore, data from primary market tracker Prime Database show.
On Thursday, Avenue Supermarts Ltd, which owns and operates hypermarkets and supermarkets retail chain D-Mart, filed share sale documents with the markets regulator. D-Mart plans to raise almost Rs1,870 crore to pare debt and open new stores.
Earlier this week, home lighting and electrical solutions firm HPL Electric and Power Ltd’s Rs361 crore IPO was subscribed almost eight times. In May, Mint reported that home-grown smartphone and consumer electronics firm Intex Technologies (India) Ltd is planning an IPO that could see it raising up to Rs700 crore.