Cold chain services company Snowman Logistics Ltd has filed its draft red herring prospectus (DRHP) for its initial public offering (IPO) in which it will look to dilute 25 per cent stake. Snowman, which recently raised pre-IPO funding from Norwest Venture Partners, will sell 42 million shares in the issue.
This comes even as BSE-listed Gateway Distriparks Ltd, promoter of Snowman, is consolidating its stake in the company before the public issue. Gateway has entered into a definitive agreement with Japanese firm Nichirei Logistics Corporation (Nichirei) to acquire the latter’s 6 per cent stake (7.4 million shares) in Snowman for about Rs 25.90 crore ($3.8 million), as per a stock market disclosure.
Post acquisition, Gateway will hold about 54 per cent stake in Snowman. Scrip of Gateway was trading at Rs 105.5, down by 0.28 per cent at 1:34 pm on Friday.
While Snowman did not disclose the amount it plans to raise from the issue, some of the recent transactions undertaken by the firm have been done at Rs 35 per share. Assuming this share price, the company could be looking to raise Rs 147 crore and value it over Rs 580 crore after the issue.
Snowman will use the funds from the IPO to set up six temperature controlled warehouses and two ambient warehouses in six cities, which will require Rs 143 crore. Another Rs 13.5 crore is expected to be used for long-term working capital requirements.
HDFC Bank's investment banking arm is the book running lead manager to the issue.
Currently, Gateway holds 48.33 per cent stake in Snowman while other major shareholders – Mitsubishi Corporation, Mitsubishi Logistics Corporation and Nichirei Logistics Group – together hold over 21 per cent stake. IFC now holds around 12.46 per cent after selling 5 per cent stake to the promoter group earlier this year.
Norwest Venture Partners holds 13.86 per cent stake, which is expected to go down to 10.21 per cent after the issue.
Bangalore-headquartered Snowman provides temperature-controlled storage services to a number of industries, catering to the likes of Hindustan Unilever, Baskin Robbins, Pizza Hut, Mother Dairy and ITC.
Snowman has 21 temperature controlled warehouses spread over 13 locations, with capacity of 46,000 pallets and 3,000 ambient pallets. It operates 238 reefer vehicles consisting of 175 leased and 63 owned vehicles. It has warehouses in all major cities, including Mumbai, Chennai and Pune, and plans to expand to other cities like Chandigarh and Surat.
Snowman saw a 78 per cent increase in revenues to Rs 114.1 crore with net profit jumping four times to Rs 20.4 crore in FY13. The firm expects revenues of around Rs 200 crore by FY14.
(Edited by Joby Puthuparampil Johnson)