At a time when investor demand for new offerings has been lukewarm and the primary market has seen lacklustre debuts in 2015, leading coffee shop chain operator Coffee Day Enterprises has filed its papers with the Securities and Exchange Board of India (Sebi) for an initial public offer (IPO) to raise an estimated Rs 1,150 crore.
The company, which runs the country’s biggest coffee chain under the brand Cafe Coffee Day (CCD) and has got private equity giants like KKR, Stanchart PE and New Silk Route as its investors, has reserved Rs 15-crore worth shares for staff. As per the draft red herring prospectus (DRHP) filed with Sebi for the public offer, the company proposes to list its shares on the BSE and the NSE. This is the first IPO document to be filed after the Sebi this week streamlined the process of IPO by reducing the time period for listing of issues from 12 to 6 days.
Despite a rally in the equity market in the current fiscal, there was only eight main-board IPOs witnessed during 2014-15. These companies collectively raised a meager Rs 2,769 crore through public offers. “The big disappointment has been the near-lack of IPOs. Despite a stable government coming into power and the resultant buoyant secondary markets only eight main-board IPOs came to the markets,” Prime Database managing director Prithvi Haldea said.
The qualified institutional placement (QIP) route was a big hit with as much as Rs 28,429 crore being garnered in 2014-15. QIPs alone account for nearly half of the total sum collected by companies this fiscal.
Investment bankers have been complaining that delays in the review of listing documents by the Sebi are complicating the listing process, jeopardising entrepreneurs’ plans to raise money from the public. However, the number of firms to hit the IPO market is set to increase as banks have gone slow in extending loans to corporates. The main promoter of Coffee Day, V G Siddhartha, also chairman and MD, holds 54.78 per cent stake, while all promoters together have 92.74 per cent holding in the company. Among other major shareholders, KKR has got 3.43 per cent and Nandan Nilekani, Infosys co-founder and former chief of UIDAI, has 1.77 per cent stake.
The shares would be offered to investors through a book building process wherein 50 per cent of the net issue would be allotted on a proportionate basis to qualified institutional investors, while the firm may allocate up to 60 per cent of the QIB Portion to Anchor Investors on a discretionary basis.