Fairwinds PE-backed Shankara Building raises $15.8 mn from anchor investors

Fairwinds Private Equity-backed Shankara Building Products Ltd has raised Rs 103.50 crore ($15.8 million) by selling shares to anchor investors ahead of its three-day initial public offering that begins on Wednesday.

Bengaluru-based Shankara, which was formerly known as Shankara Infrastructure Materials Ltd, allotted 2.25 million shares to 16 institutional investors at the upper end of the Rs 440-460 price band, a stock-exchange filing showed.

Among Indian asset managers, Tata Trustee Company, L&T Mutual Fund, SBI Mutual Fund, BNP Paribas, Invesco and UNIFI Capital’s AIF bought Shankara’s shares. Reliance Nippon Life Insurers and ICICI Prudential Life Insurance were the other buyers.

Anchor investors are institutional investors who accept a one-month lock-in period for a sizeable allocation of shares and support a public offering. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.

Shankara is seeking a valuation of Rs 1,050 crore through the IPO.

The IPO comprises a fresh issue of shares worth Rs 50 crore and an offer for sale of nearly 1 million shares by managing director Sukumar Srinivas and 5.7 million shares by Fairwinds.

The Rs 354.4 crore-IPO, which will result in a 33.7% stake dilution, will close on 24 March. The public offering would mark the third liquidity event for Fairwinds, which is managing the PE fund raised under Reliance Equity Advisors, according to VCCEdge, the data research platform of News Corp VCCircle.

Shankara filed its draft prospectus with the Securities and Exchange Board of India on 28 September 2016 and received the capital markets regulator’s approval on 22 December.

Fairwinds acquired a 34.8% stake in Shankara in 2011 for Rs 80 crore, valuing the firm at Rs 230 crore. It also had the right to invest Rs 20 crore more over two years, but it did not exercise the right. It is now selling three-fourths of its 34.78% holding in the issue.

Earlier this year, Fairwinds sold its stake in school chain Pathways back to the promoters. In another deal, it exited Amber Enterprises Pvt. Ltd, one of the largest original equipment manufacturers of consumer durables in India. This was through a secondary deal where the private investment unit of Goldman Sachs Group acquired the stake.

Shankara’s IPO is the fifth in 2017, after that of BSE Ltd, D-Mart hypermarket chain operator Avenue Supermarts Ltd, Jagran Prakashan Ltd’s radio unit Music Broadcast Ltd and education services company CL Educate Ltd.

The fundraise by the five companies, including Shankara, will amount to Rs 4,200 crore. This extends the good run after a blockbuster 2016 when fundraising by companies via initial share sales jumped to a six-year high of Rs 26,500 crore.

The IPO market in India picked up pace after four years of slow activity in mid-2014 when the BJP-led government took over. In 2015, 21 companies had raised about Rs 14,000 crore, as per stock-exchange data.

For more details of the Shankara IPO, click here.

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