Gaja Capital-backed CL Educate’s IPO covered 77% on second day
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Gaja Capital-backed CL Educate’s IPO covered 77% on second day

By Ankit Doshi

  • 21 Mar 2017
Gaja Capital-backed CL Educate’s IPO covered 77% on second day

The initial public offering of education services company CL Educate Ltd, which is backed by private equity firm Gaja Capital, was covered 77% on the second day of the issue on Tuesday.

The offering of 3.33 million shares, excluding anchor allotment, has so far received bids for nearly 2.57 million shares, stock-exchange data showed.

Institutional investors led the bidding as their quota was covered almost twice. The retail investors’ portion was covered about 40%. Non-institutional investors such as corporate houses and wealthy individuals continued to stay away as their quota was subscribed just 0.04%.

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New Delhi-based CL Educate is the first education services company to float an IPO for five years, after MT Educare Ltd in March 2012. The IPO was covered 36% on the first day.

On Friday, CL Educate had raised Rs 71.68 crore ($10.95 million) by selling shares to anchor investors.

The education services company, best known for its test prep brand Career Launcher, allotted nearly 1.43 million shares to nine institutional investors at the upper end of the Rs 500-502 price band.

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CL Educate is seeking a valuation of Rs 708.84 crore ($107.11 million) through its IPO. Gaja Capital, the company’s promoter, promoter group individuals and institutional shareholders will dilute their stakes.

CL Educate’s Rs 238.95 crore IPO comprises a fresh issue of 2.18 million shares and an offer for sale of nearly 2.58 million shares. It will see a dilution of a 33.61% stake on a post-offer basis.

The company plans to use a tad more than Rs 50 crore to meet working capital requirements for itself as well as its subsidiaries GK Publications Pvt Ltd and Kestone Integrated Marketing Services Pvt Ltd.

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

CL Educate had, in September 2014, sought a valuation of $130-140 million in a proposed IPO, according to VCCircle estimates at the time. But it shelved its IPO plans in April 2015.

The company filed its draft red herring prospectus again with the capital markets regulator Securities and Exchange Board of India in March 2016. It received regulatory clearance in June last year.

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