Coffee Day Enterprises Ltd, which runs India's top coffee chain under the Cafe Coffee Day (CCD) brand among other businesses, got a caffeine shot on Thursday after a slow start for its initial public offering (IPO). The public issue saw bids worth 75 per cent of the share sale at the end of the second day.
Stock-exchange data showed that the IPO subscription was led by qualified institutional buyers. The portion reserved for them was oversubscribed and got bids worth 1.97 times their quota, with one day to go.
Retail investors have applied for around 34 per cent of their portion but non-institutional investors and high net-worth investors have not been too enthused by the issue with their portion covered just under 8 per cent.
On the first day of the issue, the IPO saw subscription only for 13.3 per cent. The issue will close on October 16.
The Bangalore-based company is looking to raise Rs 1,165 crore in its IPO, including Rs 15 crore from a portion reserved for employees. The issue will allow the firm to raise capital that it could use to maintain its lead over US coffee chain Starbucks and other rivals in the bustling Indian market.
On the eve of the IPO, which opened for subscription on Wednesday, the company raised Rs 334.2 crore ($51.3 million) from anchor investors at the upper end of the price band.
For the IPO, one of the biggest in years, the company has fixed Rs 316-328 a share as the price band. At the issue price band, the company would be looking at a post-listing market capitalisation of Rs 6,551 crore to 6,800 crore ($1-1.04 billion).
The firm had raised Rs 100 crore from a group of investors, including Infosys co-founder Nandan Nilekani, Rakesh Jhunjhunwala and Ramesh Damani early this year at an effective price of Rs 362.5 a share.
The coffee chain counts a string of private equity backers, including KKR, New Silk Route and Standard Chartered Private Equity. Notably, none of the PE investors is looking to cash out in the IPO.
Kotak Mahindra Capital, Citigroup, Morgan Stanley, Axis Capital, Edelweiss and YES Bank are bankers for the IPO.