AV Birla Group-backed V-Mart raises money from anchor investors

Delhi-based V-Mart Retail, a value retailer focusing on tier II and tier III cities, has raised Rs 14.16 crore from two anchor investors for its maiden public offering. The company is looking to raise up to Rs 96.6 crore at the upper end of the price band of the IPO, which will open on Feb 1 and close on Feb 5.

Naman Finance & Investment Pvt Ltd, an investment entity of the $40 billion Aditya Birla Group (separate from Aditya Birla Private Equity), will make approximately 3.5x its investment in the retailer at the upper end of the price band. Naman Finance, which will get Rs 37.3 crore by selling part of its stake in the issue, will see its shareholding fall from 21.74 per cent to 8.74 per cent.

The issue has a price band of Rs 195-Rs 215 per share. The anchor investors in the issue include IDFC Premier Equity Fund and Morgan Stanley Mutual Fund, who bought shares at Rs 210 per unit. Anand Rathi Advisors is the book running lead manager to the issue.

V-Mart made a pre-IPO placement of equity shares worth Rs 26.25 crore earlier this month with investors such as Antique Finsec, Antique Stock Broking, Four Dimensions Securities (India), Lata Manek Bhanshali, Merit Credit Corporation and Tejal Rohit Kothari. The company is selling nearly 4.5 million equity shares in the issue which includes a fresh issue of 2.76 million shares and sale of 1.73 million shares. The issue will constitute 25.04 per cent of the post-issue paid-up capital of V-Mart.

V-Mart was started in 2002 by Delhi-based Lalit Agarwal, who is the first cousin of Vishal Retail chairman RC Agarwal. The retail business of debt-laden Vishal was jointly acquired by TPG and Shriram Group in 2010. Public-listed Vishal Retail has been named V2 Retail since then.

V-Mart has said it is also looking to raise Rs 31.25 crore through a pre-IPO placement of 1.25 million shares with certain investors. This means the company is looking to sell the shares at around Rs 250 a unit (the final price may differ), indicating a post-issue valuation of nearly Rs 450 crore.

Naman Finance & Investment acquired the stake in 2008 for Rs 20.5 crore or Rs 62 per share, according to VCCircle estimates. The fibre-to-telecom group is also present in retail business through fashion & textiles player Madura Lifestyle, food & grocery retail chain More and the recently acquired apparel retail business of Pantaloon Retail.

V-Mart’s total income stood at Rs 250 crore for the eight-month period ended Nov 30, 2012, and profit after tax was Rs 13 crore for the same period.

Total income grew at a CAGR of 30.19 per cent – from Rs 98 crore in FY2008 to Rs 282 crore in FY2012. Its profit after tax grew at a CAGR of 31.71 per cent – from Rs 3.52 crore to Rs 10.61 crore in the same period. The company has total debt of less than Rs 40 crore.

In FY12, around 76 per cent of V-Mart’s total income has come from apparels & general merchandise and 24 per cent from Kirana Bazaar.

V-Mart owns and operates 62 stores spread across 53 cities and 10 states & union territories, with a total area of 5.06 lakh sq. ft.

(Edited by Sanghamitra Mandal)

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