Food pulp manufacturer Capricorn Food Products India Ltd has received approval from the country's markets regulator to float an initial public offering (IPO).
The Chennai-based firm counts Quadria Capital-managed India Build-Out Fund (IBOF) as its backer.
The Securities and Exchange Board of India's (SEBI) green light on April 12 for Capricorn's IPO means that 13 companies have now received clearance to go public in 2018.
In all, 46 firms got the nod to go public in the last calendar year, according to SEBI's website.
Capricorn had filed its draft red herring prospectus (DRHP) with SEBI on February 6.
The IPO comprises fresh issue of shares worth Rs 171 crore besides a secondary sale of up to 7.64 million shares by promoters Rahoul Jain and Shuchi Jain, PE investor India Build-Out Fund and other shareholders.
VCCircle had reported last September that Capricorn was considering an IPO to offer an exit to its investor IBOF. At the time, the company was said to be considering an IPO size of Rs 400-600 crore.
In 2013, Capricorn had secured Rs 60 crore ($10 million at the time) from the then Quadria Capital-managed India Build-Out Fund to drive its expansion plans.
At present, IBOF is managed by IBOF Investment Management. Capricorn is IBOF's last portfolio company. An earlier effort by the company to get strategic players on board to facilitate the fund’s exit had not materialised.
Capricorn will use Rs 100 crore of the fresh net proceeds towards full or partial repayment/prepayment of certain outstanding debts. It also intends to use Rs 41 crore for investment in its subsidiary, Gonglu Agro Pvt. Ltd. An undisclosed portion will be used for general corporate purposes.
IIFL Holdings Ltd, ICICI Securities and IDFC Bank are the merchant banks managing the IPO.
IPOs in the space
While it is not common for food processing companies to go public, a couple of other companies in the sector recently joined Capricorn in seeking to launch an IPO.
Nekkanti Sea Foods Ltd, a Visakhapatnam-based seafood processing and exporting company, filed its DRHP in March.
In addition, VCCircle reported last month that Visakhapatnam-headquartered Devi Fisheries Ltd has hired two merchant bankers to take the company public.
Last year, Kakinada, Andhra Pradesh-based Apex Frozen Foods Ltd floated an IPO that was covered six times.
Company and financials
Founded in 1998, Capricorn Food Products India supplies fruits and vegetables-based ingredients to more than 300 customers including branded fruit-based beverage companies, processed food producers, companies selling ice cream and bakery items, frozen foods and firms selling frozen fruits and vegetables.
Its major domestic customers include multinational companies such as Coca-Cola India Pvt. Ltd, and Varun Beverages Ltd. It also supplies to Manpasand Beverages Ltd, Cremica Food Industries Ltd, FieldFresh Foods Pvt Ltd, Hector Beverages Pvt Ltd and certain multinational companies in the domestic market.
Capricorn's overseas customers include Aujan Industries LLC, Crop’s Fruits NV, Ardo UK Ltd and Agrana Fruit Services GmbH.
Capricorn reported total revenues of Rs 460.78 crore and net profit of Rs 23 crore for the financial year 2016-17.
Its revenue grew at a compounded annual rate (CAGR) of 13.61% in the three years starting 2013-14. Capricorn’s net profit increased at a CAGR of 22.64% during the same three-year period.