Monte Carlo files for IPO; promoters, Samara Capital offer shares for sale

Nahar Group-promoted Monte Carlo Fashions Ltd has filed its documents for floating its IPO through offer for sale by its promoters and private equity investor Samara Capital, which is looking to part exit the firm within two years of picking a stake in the company.

The company’s existing shareholders together will sell 5.4 million shares representing some 25 per cent stake. The company won’t get any money out of the issue and the money will go the shareholders who are selling shares.

It is yet to decide on the pricing of the issue. Samara Capital had picked stake in the firm through an investment of Rs 125 crore and a simultaneous purchase of shares worth Rs 50 crore from its promoters. These transactions were at Rs 435 a share, valuing the firm at Rs 945 crore.

Given that the firm would be looking at giving a mark-up to the financial investor, the IPO size would be easily worth over Rs 235 crore.

VCCircle had reported in March this year that the firm is eyeing an IPO worth Rs 400 crore.

India-focused mid-market private equity firm Samara Capital is looking to sell around half of its 18.5 per cent stake representing 2 million shares in the proposed IPO. The rest of the shares are being offered by the promoter Oswal family.

The book running lead managers for the IPO are SBI Capital, Axis Capital, Edelweiss and Religare Capital Markets.

Monte Carlo was launched as a woolen apparel brand in 1984 under Oswal Woollen Mills Ltd. In 2011, the group’s flagship Oswal Woollen Mills hived off this premium apparel brand into a separate entity to unlock the value of the brand through IPO and private placement.

The firm is now into woolen as well as cotton apparel where it sources the latter from other manufacturers while making all of the woolen apparel in its own factories. It sells through its exclusive branded outlets and multi-branded retailers.

As on March 31, 2014 there were 191 ‘Monte Carlo Exclusive Brand Outlets’ in India, two such stores in Dubai and one in Kathmandu, Nepal. Of the 191 exclusive stores in India, 17 are owned and operated by the company itself and the rest are run through franchisee partners.

The firm had said in November 2011 that it was looking to dilute up to 25-30 per cent stake through PE and public issue to raise Rs 330-380 crore. However, the IPO could not happen due to tight market conditions.

In fiscal 2013-14, Monte Carlo posted a net profit of Rs 55.38 crore on revenues of Rs 518.89 crore.

The company said it has been able to increase its total revenue from fiscal 2012 to fiscal 2014 at a compound annual growth rate of 17.57 per cent and its net profit has grown at a compound annual growth rate of 6.47 per cent over the same period.

(Edited by Joby Puthuparampil Johnson)

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