Monte Carlo opening $57M IPO next week; Samara Capital to part-exit with 50% upside

Nahar Group-promoted Monte Carlo Fashions Ltd has filed its red herring prospectus and said it plans to open its public issue next week, which would comprise entirely of an offer for sale by promoters and existing investor Samara Capital.

The issue, which would open on December 3 and close on December 5, would see Samara Capital part exit its two-year-old investment.

The company has fixed a price band of Rs 630-645 a share, which 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 company will not get any money out of the issue and the money will go the shareholders who are selling shares.

India-focused mid-market private equity firm 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.

The firm is looking at a valuation of around Rs 1,400 crore in the public float, which would give an upside of around 50 per cent to Samara on its just over two-year old investment.

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

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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