Gaja Capital-backed CL Educate raises $10.95 mn from anchor investors ahead of IPO

New Delhi-headquartered education services company, CL Educate Ltd on Friday raised Rs 71.68 crore ($10.95 million) through sale of shares via anchor allotment ahead of its three-day initial public offering (IPO) that begins Monday.

CL Educate, best known for its test prep brand Career Launcher, allotted nearly 1.43 million shares to nine institutional investors at Rs 502 per share, the upper end of the Rs 500-502 price band, stock exchange filings showed.

The investors that acquired the shares include DSP Blackrock India, Singapore-based Flowering Tree Investment Management through its arm Ashoka Pte Ltd, and Sanjoy Bhattacharyya's Ocean Dial Gateway to India (Mauritius).

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 the benchmark for the investor community at large.

Among Indian asset managers, HDFC Trustee Co, Sundaram Mutual Fund and Principal Trustee Co acquired CL Educate shares.

Among Indian insurers, Canara HSBC Oriental Bank of Commerce Life Insurance Co, HDFC Standard Life Insurance Co, ICICI Lombard General Insurance Co were buyers.

Anchor investor interest in CL Educate assumes importance as the company will be the first education services startup to float an IPO in the past five years. MT Educare Ltd with a Rs 35-crore public offering was the last company in the space to float an IPO in March 2012.

CL Educate is seeking a valuation of Rs 708.84 crore ($107.11 million) through its IPO next week.

The IPO will begin on 20 March and close on 22 March. Private equity backer, Gaja Capital, will make a part-exit. Besides, the promoter, promoter-group individuals and institutional shareholders are also expected dilute their stakes in the company.

CL Educate’s Rs 238.95 crore ($36.10 million) IPO will comprise a fresh issue of 2.18 million shares besides an offer for sale (OFS) of nearly 2.58 million shares. It will see a dilution of 33.61% stake on post-offer basis.

The company has proposed to utilise a tad more than Rs 50 crore of the net proceeds from the IPO to meet working capital requirements for itself as well as its subsidiaries, GK Publications Pvt Ltd and Kestone Integrated Marketing Services Pvt Ltd.

It will also use about Rs 20 crore to pre-pay a debt of its subsidiary Career Launcher Infrastructure Private Ltd (CLIP). Besides, it will earmark about Rs 25 crore for acquisitions and strategic initiatives as well as for general corporate purposes.

In September 2014, CL Educate had sought a valuation of $130-140 million of a proposed IPO, according to VCCircle estimates. It had finally shelved its IPO plans in April 2015.

On 30 March 2016, CL Educate had refiled a draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India (SEBI). It had received regulatory observations on 24 June last year.

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