In a setback to its public market debut, private equity firm Milestone Capital today said it had withdrawn its draft red herring prospectus for the proposed initial public offering. The firm had filed the DRHP with market regulator SEBI eight months back.
A brief statement, signed by Milestone Chief Financial Officer Paritosh Kakkad, said, “The board of Milestone Capital Advisors Ltd has taken a decision to withdraw the DRHP and will initiate the process again at an appropriate time.” The reasons for withdrawing the DRHP were not given.
Milestone managing director Ved Prakash Arya too declined to comment any further on the move.
According to a PTI report, the regulator had raised many issues and sought clarifications from the company on high risks associated with IPO funds being utilised for private equity investments. SEBI's main contention was raising money from retail investors for PE and VC investments, which is a domain of institutional investors.
Milestone Capital Advisors replied to the clarifications through the lead issue manager IDFC Capital Ltd, but the regulator was apparently not satisfied with the details furnished by the company, the PTI story said, quoting a source.
The company's merchant bankers for the proposed IPO are IDFC Capital, Edelweiss Capital and ICICI Securities.
According to an earlier VCCircle report, based on the DRHP, the PE firm intended to use the proceeds to seed an infrastructure fund and a small & medium enterprises (SME) focused fund besides the purchase of an office in Mumbai.
Milestone Capital was planning to raise a Rs 800 crore infrastructure fund with a green shoe option of another Rs 200 crore and a Rs 350-crore SME fund with a greenshoe of another Rs 150 crore. Of the issue proceeds, Rs 100 crore was proposed to be used to seed an infrastructure fund and another Rs 50 crore for the SME fund. Around Rs 25 crore was proposed for the purchase of an office in Kurla (West), Mumbai, as per the earlier VCCircle report.
Milestone Capital currently has two domestic and an overseas realty schemes. The two domestic schemes, MDS-I and MDS-II, have a committed corpus of Rs 229 crore and Rs 503 crore, respectively while it is raising MDS-III with a targeted corpus of Rs 500 crore. Milestone Fund LLC, the offshore fund, has a committed corpus of $82 million (Rs 380 crore).
Milestone also has a joint venture for real estate rental-yield projects with IL&FS Investment Managers, the only listed private equity player in India. Milestone holds a 40% stake in the JV, IL&FS Milestone Realty Advisors Ltd, which has picked up a 74% stake in 247 HCC Park, a 1.8 million square feet commercial property located in Vikhroli in Mumbai at around Rs 575 crore. Milestone Capital also has JV with Religare Venture Capital (part of Religare Enterprises) for an education and healthcare focused fund. This fund has managed to raise Rs 355 crore from domestic investors and is also planning to raise another $250 million from overseas investors.