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Devendra Shah (Executive Chairman, Parag Milk Foods Limited) at the press IPO conference of Parag Milk Foods Limited

Parag Milk eyes $300M valuation in IPO, snips fresh issue size

26 April, 2016

Dairy firm Parag Milk Foods Ltd is seeking a valuation of as much as $300 million (about Rs 2,000 crore) through an initial public offering that opens next week.

The company has fixed a price band of Rs 220-227 a share for the IPO, it said in a statement. The IPO comprises a fresh issue of shares to raise Rs 300 crore and an offer for sale of about 20.05 million shares that could mobilise almost Rs 470 crore for the sellers.

The dairy firm has trimmed the fresh issue and slightly increased the offer for sale. In the draft red herring prospectus filed in October, Parag Milk had proposed to raise Rs 325 crore through the fresh issue and had pegged the number of shares to be sold by IDFC Alternatives and Motilal Oswal Private Equity and other shareholders at 19.85 million.

IDFC Alternatives has retained the number of shares it is selling at the same level in the red herring prospectus, but Motilal Oswal PE is now selling more than previously announced.

IDFC Alternatives and Motilal Oswal PE hold 19.21 per cent and 9.11 per cent stake in the company, respectively, besides convertible debentures that will be converted into equity. Both are part-exiting.

The Pune-based dairy firm didn’t immediately respond to an email query seeking comment on the changes in the offering.

Parag Milk will be the second dairy firm to float an IPO after Prabhat Dairy Pvt Ltd within a year. Prabhat Dairy’s IPO in September last year had received a poor response and its shares made a tepid debut on the stock markets. Shares of Prabhat Dairy have barely changed since listing.

VCCircle was the first to report that Parag Milk might look to list its shares even as media reports suggested that it was in talks with various strategic players including Dutch dairy cooperative Friesland-Campina to sell a majority stake.

The company received approval from the Securities and Exchange Board of India for the IPO earlier this year. The share sale will open on May 4 and close on May 6.

Of the proceeds of the fresh issue, the firm plans to use Rs 150 crore for expansion and modernisation of its manufacturing facilities at Manchar, near Pune, and at Palamaner in Andhra Pradesh. It also plans to use the funds to repay working capital loans of Rs 100 crore and for general corporate purposes.

The issue is being managed by Kotak Mahindra Capital, JM Financial Institutional Securities, IDFC Securities and Motilal Oswal Investment Advisors.

Founded in 1992 as a milk distributor, Parag Milk has developed into a dairy-based branded consumer products company. It makes products such as cheese, ghee, fresh milk, whey protein, paneer, curd, yogurt, milk powder and dairy-based beverages.


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Parag Milk eyes $300M valuation in IPO, snips fresh issue size

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