Two more private equity backed firms—Hinduja Leyland Finance Ltd and CL Educate Ltd—have received approval from capital markets regulator Securities and Exchange Board of India (SEBI) to float their initial public offerings (IPOs).
This expands the list of firms sitting with approval to go public, to 21. Three-fourths of these companies count at least one private equity investor.
Hinduja Leyland Finance, the commercial vehicle (CV) financing arm of the Hinduja Group, plans to raise about Rs 500 crore (approximately $75 million) through a fresh issue of shares, besides an offer-for sale of up to 26,608,810 equity shares by existing investor Everstone Capital.
The non-banking finance company plans to use the proceeds to augment its capital base to meet its future capital requirements over the next two financial years (financial years 2017 and 2018).
Axis Capital, ICICI Securities, SBI Capital Markets and Yes Securities are bankers to the proposed IPO.
Meanwhile, education services company CL Educate Ltd, best known for its test prep brand Career Launcher that had refiled its draft red herring prospectus with SEBI has also got the clearance for its IPO.
The company had first filed its documents with SEBI in September 2014. It hadn’t disclosed the amount it planned to raise but the issue size was estimated to be around Rs 240 crore ($40 million then), of which Gaja Capital and the company's promoters were to get about half.
However, in April last year, it deferred its plans and withdrew its application. Earlier this year, it said in a letter to its shareholders that it was looking to raise Rs 350 crore ($53 million) through the proposed share sale.
As per the latest draft prospectus, the company has increased the total issue size from about 4 million shares to almost 4.7 million shares. While the size of the fresh issue has only slightly increased to about 2.06 million shares, the offer for sale by existing investors and promoters has risen to 2.63 million shares from 1.98 million shares earlier.
Also, the IPO previously comprised 29.28% of the proposed post-issue equity base. This has now increased to 33.5%.
Existing investor Gaja Capital, which is looking to part-exit through the IPO, has cut its offer for sale size. Mortgage lender HDFC, which wasn’t part of the list of selling shareholders earlier, is now offloading 2,00,000 shares, or almost one-third of its stake in the company.
The company plans to use funds raised from the issue for acquisitions and other strategic initiatives, loan repayment, working capital requirements and other general corporate purposes.
CL Educate started operations in 1996 as a provider of MBA test preparation courses. It later diversified across the education value chain—test preparation and training, generally referred to as test prep, under the Career Launcher brand; publishing and content under GK Publications; K12 schools under the brand Indus World Schools with 10 schools across India; and vocational training programmes.
The firm is also into certain recruitment, training and event management services for corporate houses through unit Kestone.
Over the years, the firm has raised institutional capital from a string of investors. Intel Capital, one of the first investors in CL Educate, exited the company a long time ago but the firm later brought in Gaja Capital and recently raised Rs 35 crore from HDFC, which has investments in the education sector. Other small investors in the firm include Granite Hill, Edelweiss Finance and India Infoline Venture Capital.
Kotak Mahindra Capital is managing the proposed issue.
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