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Fairwinds PE-backed Shankara’s IPO crosses half-way mark on day one

22 March, 2017

The initial public offering (IPO) of Shankara Building Products Ltd, which is backed by Fairwinds Private Equity, crossed the half-way mark on the first day of the issue on Wednesday led by retail investors.

The offering of 5.3 million shares, excluding anchor allotment, received bids for nearly 2.7 million shares, or 51% of the total, stock exchange data showed.

The retail investors’ portion was almost fully covered, while the quota for non-institutional investors comprising corporate bodies and wealthy individuals was subscribed about 10%.

Institutional investors did not bid for a single share on the first day.

On Tuesday, Bengaluru-headquartered Shankara raised Rs 103.50 crore ($15.79 million) through sale of shares via anchor allotment ahead of its three-day IPO that began Wednesday.

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

Shankara is seeking a valuation of Rs 1,050 crore ($160 million) through the IPO.

The IPO comprises a fresh issue of shares worth Rs 50 crore besides an offer for sale of nearly one million shares by managing director Sukumar Srinivas and 5.7 million shares by existing PE investor 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 currently 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 capital markets regulator Securities and Exchange Board of India (SEBI) on 28 September. It received the 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 (7.6 million shares) in the proposed issue.

Early 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 and joins companies like 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 in floating IPOs this year.

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.

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Fairwinds PE-backed Shankara’s IPO crosses half-way mark on day one

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