Mumbai: Bengaluru-based auto-component maker Sansera Engineering Pvt. Ltd has appointed investment banks to start work on its initial public offering (IPO) which could be around ₹ 1,400-1,500 crore in size, two people aware of the development said.
The company is backed by US-based private investment group The Rohatyn Group (TRG). Last month, Mint reported that Sansera Engineering was exploring an initial share sale.
“Sansera has appointed ICICI Securities, Nomura and Credit Suisse to start work on its IPO. The company plans to raise around ₹ 1,400-1,500 crore through its IPO, which is expected to hit the market before the end of the year," said the first of the two persons cited above, requesting anonymity, as he is not authorized to speak with the media.
According to the second person, the IPO will largely be a secondary sale of shares by the company’s PE investor, TRG, as it is looking to offload a significant part of its stake.
“TRG holds over 50% stake in the company and they want to bring that down substantially through the IPO. Hence, the IPO will largely be comprised of an offer for sale, though it will also have some primary component," he said. He too requested anonymity.
TRG holds a 51% stake in Sansera Engineering. This stake was originally acquired by Citi Venture Capital International (CVCI), the emerging markets private equity arm of US bank Citigroup, for ₹ 340 crore ($56 million) in July 2013. In December 2013, TRG acquired the CVCI business from Citigroup.
“As a matter of policy, we do not respond to media queries on our business," said a spokesperson for TRG in an email response to Mint’s queries. Emails sent to Sansera Engineering, ICICI Securities and Credit Suisse were not answered. Nomura declined to comment.
For the financial year 2016-17, the auto parts maker reported a consolidated revenue of ₹ 1,034.2 crore, a growth of 14.8% over the previous year’s ₹ 901 crore, according to data from the company’s filings with the Registrar of Companies (RoC).
The company’s Ebitda (earnings before interest, tax, depreciation and amortization) grew by 9.3% to Rs174.4 crore in fiscal 2016-17. However, the company’s consolidated profit grew just 2.4% to ₹ 68.8 crore in 2016-17, data shows.
Founded in 1987, Sansera’s product portfolio encompasses components such as crankshaft assemblies, rocker arms, gear shifter forks, common rail, connecting rods and others.
Sansera has seven manufacturing facilities spread across Maharashtra, Karnataka, Himachal Pradesh and Uttaranchal.
Several auto component makers have used the buoyant primary market to raise funds and provide exits to their private equity investors.
In the last three years, auto component makers Sandhar Technologies Ltd, Endurance Technologies Ltd, GNA Axles Ltd and Precision Camshafts Ltd have raised funds through IPOs.
In March, Varroc Engineering, another auto component maker, filed preliminary papers with markets regulator for an initial public offer.
Varroc is engaged in design, manufacture and supply of exterior lighting systems, plastic and polymer components and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off-highway vehicle companies directly worldwide.