Varroc IPO subscribed over 3.5 times on last day of issue

Mumbai: Auto components maker Varroc Engineering Ltd’s ₹ 1,955 crore initial public offering (IPO) was subscribed 3.59 times on Thursday, the final day of the share sale, according to data from the stock exchanges. As of 7pm, the portion of shares reserved for institutional investors in the Varroc Engineering IPO was subscribed 9.16 times, while those reserved for retail investors and high net-worth individuals (HNIs) were subscribed 94% and 2.45 times, respectively.

Varroc Engineering, backed by Tata Opportunities Fund, had fixed a price band of ₹ 965-967 per share for the IPO—a pure offer for sale 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 promoter Tarang Jain fetching ₹ 169.4 crore. Jain holds a 46.35% stake in the company.

Tata Opportunities Fund is making a complete exit from Varroc Engineering through the IPO. It owns a 12.55% stake in the company and stands to make ₹ 1,635.8 crore. The fund had invested ₹ 300 crore in 2014.

Another Tata entity, Tata Capital Financial Services Ltd, is also selling its entire 1.15% stake in the company. Tata Opportunities Fund’s exit from Varroc Engineering 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 managed the Varroc Engineeering IPO.

Founded in 1990 in Aurangabad, Varroc Engineering 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. It has 36 manufacturing facilities spread across seven countries.

Between FY16 and FY18, Varroc’s revenue grew at a compound annual growth rate of 12.37%.