Cafe Coffee Day parent to open IPO next week

Coffee Day Enterprises Ltd, which runs India's top coffee chain under the Cafe Coffee Day (CCD) brand among other businesses, will launch its initial public offer (IPO) next week, to raise capital and maintain its lead over Starbucks and other peers in the bustling Indian market.

The firm that had raised Rs 100 crore from a group of private investors including Infosys co-founder Nandan Nilekani, ace private investors Rakesh Jhunjhunwala and Ramesh Damani, early this year, is to open the issue on October 14 and close it for subscriptions on October 16.

The Bangalore-based company that counts a string of private equity backers, including KKR, is looking to raise Rs 1,150 crore in its IPO. This would make it one of the largest IPOs in the recent times topping the public issue of Inox Wind, that went public in March this year. It won't hold this slot for long, however. Budget carrier IndiGo is slated to come up with a bigger public issue soon.

Factoring in the fresh equity issue early this year and the subsequent bonus issue, the company would price its issue at or above Rs 362.5 each. At that level it would command a valuation of well over $1.1 billion, as per VCCircle estimates.

CCD, an early mover in the coffee chain business successfully fended off competition from Barista (later acquired by Italy's Lavazza) among others. However, it now faces a challenge as US-based Starbucks, the world's top coffee chain, is aggressively expanding in the country with its joint venture with Tata Global Beverages.

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 to the IPO.

Click here for our previous report on the IPO.

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