The SIS India IPO will also see the firm raise primary capital, which it plans to utilize to grow through acquisitions
Mumbai: CX Partners-backed Security and Intelligence Services (India) Ltd (SIS) has hired four investment banks as it prepares for an initial public offering (IPO) of almost ₹ 1,000 crore, said three people aware of the development.
“The company had held several rounds of discussions with investment banks since the end of last year and they gave out the mandates a couple of weeks ago," said one of the people, all of whom spoke on condition of anonymity.
SIS has hired Kotak Mahindra Capital Co. Ltd, ICICI Securities Ltd, Axis Capital Ltd and IIFL Holdings Ltd to manage the IPO, said the person. CX Partners had picked up a 20% stake in the security services firm for ₹ 500 crore in 2012, valuing it at ₹ 2,500 crore. Emails sent on Monday morning to SIS India did not elicit any response. CX Partners declined to comment.
The development marks yet another planned exit for the home-grown private equity (PE) fund launched by Ajay Relan.
“A large part of the IPO will be an offer for sale by CX Partners. The PE investors are the driving force behind the IPO and are looking to exit several of their investments and the SIS IPO is part of that move," said another of the three people cited earlier.
On 2 May, Mint reported that Convergys Corp., a US-based call centre operator with operations in India, is in advanced talks to buy business process outsourcing firm Minacs Ltd (jointly owned by Capital Square Partners Pte Ltd and CX Partners) in a deal worth $500 million.
Earlier in April, Mint reported that CX Partners is in talks to sell its stake in surgical equipment maker Sutures India Pvt. Ltd. Domestic PE fund Kedaara Capital and Malaysian sovereign wealth fund Khazanah Nasional Bhd have emerged as likely buyers for the minority stake, Mint reported.
Thyrocare Technologies, another CX Partners investee firm, went public last month. CX Partners sold the majority of the stake it held in the firm through the IPO.
The SIS India IPO will also see the firm raise primary capital, which it plans to utilize to grow through acquisitions, added the second person cited above.
According to the company’s website, the firm reported revenue of almost ₹ 3,500 crore in 2015. Apart from offering security services, SIS India has also expanded into other businesses such as facility management.
According to experts, while security services is a big market, the industry faces several challenges. “The market for security services such as guarding is huge and there is easy availability of manpower. However, most of the manpower is unskilled for the role of guarding. So companies need a lot of focus on skill development, creating campuses to train people," said Dhanraj Bhagat, partner at Grant Thornton India Llp.
Focus is also needed on compliance issues, such as proper maintenance of personal identity documents of people hired for such roles, he said, adding that these matters can increase costs for the industry.
So far this year, 10 companies have raised ₹ 6,743 crore through the IPO route, while last year 21 companies raised ₹ 13,614 crore, according to data from primary market tracker Prime Database.