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Piramal-Bain Capital fund-backed Archean Chemical files for Rs 2,000-2,200 cr IPO

By Ankit Agarwal

  • 21 Feb 2022
Piramal-Bain Capital fund-backed Archean Chemical files for Rs 2,000-2,200 cr IPO
Credit: 123RF.com

Specialty marine chemical manufacuturer Archean Chemical Pvt. Ltd, which is backed by India Resurgence Fund (IndiaRF), has filed its draft red herring prospectus (DRHP) for an initial public offering (IPO).

The issue will comprise of primary issuance of shares worth Rs 1,000 crore and an offer-for-sale of up to 19.07 million shares from existing investors, as per the DRHP.

Chennai -based Archean Chemical, which is part of art of Archean Group, seeks to raise anywhere between Rs 2,000 crore and Rs 2,200 crore through the IPO, people close to the company told VCCircle.

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According to the DRHP, up to Rs 800 crore of the proceeds from the primary issue will be used for redemption of non-convertible debentures (NCDs) and the remaining amount, if any, will be used for general corporate purposes. 

The company's promoter entity, Chemikas Speciality LLP (CS LLP) will sell up to 5.3 million shares; India Resurgence Fund (India RF), a joint venture between Piramal Enterprises and Bain Capital Credit, will divest up to 10.04 million shares through two of its schemes; and Piramal Natural Resources Pvt. Ltd. (PNRPL) will offload up to 3.7 million shares in the secondary offering.

Among the promoters, IndiaRF owns 23.32% stake, and PNRPL and Sojitz Corp hold 8.67% and 2.42% stake, respectively, in the company. Promoter group of the company including CS LLP, Ranjit Pendurthi, and Ravi Pendurthi together hold 65.58% stake in the company.

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An email sent the Archean Chemical on the IPO value did not elicit an immediate response.

In 2018, India RF had invested $156 million (Rs 1,100 crore) in Chennai-based Archean Chemical Industries Pvt. Ltd through debt and equity.

Archean Chemical is focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world. The company produces its products from its brine reserves in the Rann of Kutch, located on the coast of Gujarat, and manufactures products at its facility near Hajipir in Gujarat.

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The bromine produced by Archean Chemical is used as key initial level material, which has applications in pharma, agrochemicals, water treatment, flame retardant, additives, oil & gas and energy storage segments.

As of September 30, 2021, the company marketed its products to 13 global customers in 13 countries, and to 29 domestic customers, as per its DRHP.

The firm’s operating revenues grew by 21.8% from Rs 608.17 crore in FY20 to Rs 740.76 crore in FY21. It reported a net profit of Rs 66.6 crore in FY21 against a net loss of Rs 36.2 crore in FY20.

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Interestingly, for the six months ended September 2022, the company’s standalone operating revenue stood at Rs 450 crore with net profit already hitting Rs 58 crore.

IIFL Securities, ICICI Securities and JM Financial are the book running lead managers to the IPO.    

J. Sagar Associates is the legal counsel to the company, Crawford Bayley & Co. and Dentons US LLP are the legal counsels to the BRLMs, and Cyril Amarchand Mangaldas will be the legal advisor to the selling shareholders.

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