Coffee Day Enterprises Ltd, which runs India's top coffee chain under the Cafe Coffee Day (CCD) brand among other businesses, has received a tepid response from the investors with its initial public offer (IPO) subscribed just around 13.3 per cent at the end of the first day.
While the qualified institutional buyers (QIBs) portion was subscribed 16 per cent, non-institutional investors and high net-worth investors subscribed to 2.6 per cent of the portion reserved for them while the retail investors’ portion was covered 15 per cent.
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.
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.
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.