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Kuwait SWF among anchor investors in Sharda Cropchem; IPO subscribed 11% day 1

05 September, 2014

Kuwait Investment Authority, the sovereign wealth fund of Kuwait, is among the group of anchor investors in Mumbai-based agrochemical firm Sharda Cropchem Ltd. The anchor investors, including various domestic mutual fund schemes besides a clutch of foreign institutional investors, have brought in Rs 52.8 crore ($8.7 million) as part of the initial public offer (IPO) of the company.

The issue, in which its private equity backer Henderson Equity Partners will exit, will see the secondary sale of around 25 per cent stake. No money will go to the company.

This is the second IPO since the new government took over in May. Last week another PE-backed company Snowman Logistics saw through a successful public float.

Here’s a snapshot on the Sharda Cropchem IPO

– Issue opened on September 5; closes on September 9

— Issue price band: Rs 144-156 per share

— Public offer of 22.55 million shares (including anchor investor portion) through offer for sale by PE investor and promoters

— The company shall not get any proceeds from the IPO which could raise up to Rs 352 crore ($58 million) at the upper end of the price band

— Equity dilution of 25 per cent, valuing the firm at around Rs 1,408 crore ($232 million).

— Issue managers: Edelweiss Financial Services and IDFC Securities.

Day 1 stats

— Overall issue subscribed 11 per cent at the end of day 1, that too led by retail investors.

— QIB portion subscribed just 4 per cent.

— HNIs and corporate bodies bid for shares less than 1 per cent of their quota.

— Retail investors were the face savers and bid for 22 per cent of the issue reserved for them.

Business

— The firm is engaged in marketing and distribution of crop protection chemicals globally. In non agro-chemical business it is involved in order-based procurement and supply of general chemicals, dyes and dye intermediates. It has primarily grown organically and recently entered into the biocide segment and has acquired several registrations from the existing registration holders, primarily, in Europe.

— Agrochemical value chain: basic and applied research; identification of new product and registration opportunities; seeking registrations; manufacture of the active ingredient; formulation and packaging; marketing and distribution.

— The company has an asset light business model focusing on identification of generic molecules and registration opportunities, preparing dossiers and seeking registrations for formulations and generic active ingredients.

— As of August 5, 2014, it had over 180 Good Laboratory Practices (GLP) certified dossiers and as of July 15, 2014, owned over 1,040 registrations for formulations and over 155 registrations for generic active ingredients across Europe, Latin America and rest of the world.

— As of August 5, 2014, it has filed over 500 applications for seeking registrations globally which are pending at different stages.

— Distributed formulations and generic active ingredients in over 60 countries across Europe, Latin America and rest of the world as on August 5, 2014.

Strategy

— Concentrate on forward integration through own sales force in existing markets

— Strengthen distribution presence in the existing and new markets, including highly regulated markets, by leveraging existing portfolio of formulations and generic active ingredients.

— Increase the scale of biocide registration organically and inorganically and focus on their marketing and distribution.

— Pursue opportunities of inorganic growth through strategic acquisitions and partnerships. In November 2011, it acquired 76 per cent stake in Axis Crop Science Private Limited, a company focused on marketing and distribution of formulations in India. This has enabled it establish presence in the Indian market.

Investor

— Private equity firm Henderson Equity Partners had picked up 15.87 per cent stake in the company in 2008 for Rs 100 crore.

— It is now exiting the company and will get Rs 223.4 crore at the upper end of the issue price band, translating into 2.2x on its six-year-old investment.

Financials

— The firm ended FY14 with total revenues of Rs 814.74 crore against Rs 792.6 crore in the previous year. Net profit in the same period rose from Rs 84.37 crore to Rs 106.9 crore.

— For FY14, its geographic spread of revenue from operations in agrochemicals stood at: Europe (61.34 per cent), Latin America (19.97 per cent) and rest of the world (9.45 per cent).

(Edited by Joby Puthuparampil Johnson)


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Kuwait SWF among anchor investors in Sharda Cropchem; IPO subscribed 11% day 1

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