Monte Carlo IPO Day 1: Aditya Birla PE comes as an anchor investor

Aditya Birla Private Equity has picked 2.5 per cent stake in Nahar Group-promoted Monte Carlo Fashions Ltd as part of an anchor investor allotment ahead of the public issue which opened on Wednesday. It acquired the shares for Rs 35 crore ($5.6 million).

This is the third such investment by the PE firm this year. Early this year it had picked a little over 1 per cent in Wonderla Holidays Pvt Ltd, coming in as an anchor investor in its IPO. TVS Capital had also picked a similar stake in Wonderla as an anchor investor.

It also participated in the pre-IPO funding round of SAIF Partners-backed Manpasand Beverages, which has just filed its documents for its own IPO.

Aditya Birla PE split its investment in Monte Carlo between both its existing funds—Aditya Birla Private Equity Fund I and Aditya Birla Private Equity Sunrise Fund.

Others who participated as anchor investors include mutual fund schemes under Tata Capital and Birla Sun Life besides an entity under Deutsche Bank. Put together, the anchor investors committed Rs 105 crore at Rs 645 a share, the upper end of the issue price band.

Meanwhile, the public issue of the company's share commenced on Wednesday. The IPO comprises entirely of an offer for sale by promoters and existing investor Samara Capital.

The issue, including the anchor investors’ portion, would allow its selling shareholders to garner up to Rs 350 crore of which Samara Capital will pocket around Rs 106 crore for selling around 40 per cent of its total holding of 18.51 per cent in the firm.

The company’s existing shareholders together are selling 5.4 million shares representing 25 per cent stake. The issue available for the public works out to around 3.8 million shares.

At the end of the first day, 61 per cent of the public issue was subscribed, exchange data show.

This was led by institutional and retail investors, both bidding for around 80 per cent of the issue reserved for them.

The issue, which opened on December 3, will close on December 5. The firm is looking at a valuation of around Rs 1,400 crore in the public float.

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

Monte Carlo was launched as a woollen 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 woollen as well as cotton apparel where it sources the latter from other manufacturers while making all of the woollen 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 franchisees.

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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