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PE-backed Snowman Logistics’ IPO fully covered on day 2 led by retail investors

27 August, 2014

Snowman Logistics, a subsidiary of Gateway Distriparks, has successfully seen through its initial public offer (IPO) with the issue being fully covered mid-way on day 2 itself of the 3-day issue window. The PE-backed firm becomes the first company to go public since the new government took over in May.

Here’s some highlights of the issue.

IPO SNAPSHOT

–Issue opened on August 26; closes on August 28

— Issue price band Rs 44-47 per share

— Public offer of 42 million shares including portion reserved for anchor investment

— Plans to raise up to Rs 197.4 crore ($33 million) at the upper end of the price band

— Equity dilution of 25.23 per cent, valuing the firm at around Rs 782 crore ($130 million).

WHO LAPPED UP THE ISSUE (as of 5 PM or end of Day 2)

–Overall issue subscribed 2.8 times or oversubscribed 1.8x at the end of Day 2.

— Institutional buyers have bid for 1.5x of the issue reserved for them.

— Retail investors have bid for almost 13x their portion and provided the impetus for crossing the finish line well ahead of time.

— HNIs/Corporates who are known to join the party on the last day of an issue had bid for around 82 per cent of the issue size marked under their basket.

BUSINESS

–Snowman provides temperature-controlled storage services.

— As of March 31, 2014, its operations comprised 23 temperature controlled warehouses across 14 locations including Serampore (near Kolkata), Taloja (near Mumbai), Palwal (near Delhi), Mevalurkuppam, (near Chennai) and Bengaluru capable of warehousing 58,543 pallets and 3,000 ambient pallets.

— As of March 31, 2014, it operated 370 Reefer vehicles consisting of 307 leased and 63 owned vehicles; It also engaged a total workforce of 1,490 including 383 permanent employees and 1,107 on a contract labour basis.

— Company caters to product segments including dairy products, ice-cream, poultry and meat, sea food, ready-to-eat food products and fruit and vegetables, confectioneries, healthcare and pharmaceutical products, industrial products such as x-ray, and photo-imaging, films.

— Its clients include Hindustan Unilever, McCain Foods, Suguna Food and Ferrero India.

STRATEGY

— In addition to enhancing storage capacity, it is also evaluating setting up temperature controlled warehouses in food parks for processing fruits and vegetable.

— Augmenting market share by penetrating markets catered to by regional or unorganised operators and in Tier II and Tier III cities

— Snowman proposes to increase its revenues from existing value added services (VAS) such as kitting, labelling and sorting. In fiscal year 2014. VAS contributed 1.05 per cent to its revenue and 5.20 per cent to its profits.

— In negotiations for managing the entire temperature controlled supply chain of certain prominent QSRs.

USE OF IPO PROCEEDS

— Capital expenditure for setting up new temperature controlled and ambient warehouses: Rs 128.28 crore. The company proposes to set up six temperature controlled warehouses (at Taloja, Cuttack, Pune, Mevalurkuppam and Visakhapatnam) and two ambient warehouses (Pune and Surat).

— Long term working capital Rs 8.41 crore

INVESTORS

–Gateway Distriparks, the promoter of the firm, currently holds 54.04 per cent stake in company; holding to shrink to 40.41 per cent post IPO.

–Mitsubishi Corporation and Mitsubishi Logistics Corporation together hold 15.49 per cent stake which would come down to 11.58 per cent.

–IFC and Norwest Venture Partners own 12.4 per cent and 13.78 per cent, respectively, which would shrink to 9.27 per cent and 10.3 per cent post issue.

ANCHOR INVESTORS

–Anchor investors subscribe to 94,50,000 equity shares for total consideration of Rs 44.4 crore at Rs 47 apiece.

–India Evolving Fund, a PE fund managed by Faering Capital, picks 3,492,000 shares for Rs 16.4 crore.

–Other anchor investors include a clutch of domestic mutual fund schemes including ICICI Prudential Growth Fund Series 2, ICICI Prudential Value Fund Series 4, IDFC Sterling Equity Fund and IDFC Infrastructure Fund.

PE INVESTORS GAIN

–Norwest sitting on unrealised gains of around 33 per cent on its one-year-old investment (at the upper end of the price band).

–IFC had originally invested Rs 25 crore four years ago but part exited early this year by selling a quarter of its holding to the promoter for Rs 18 crore. Its remaining holding is worth Rs 72.5 crore, and it is sitting on a multi-bagger.

FINANCIALS

–The firm has seen its revenues rise at a CAGR of over 45 per cent over the last four years.

–Net revenues for FY14 rose to Rs 153.4 crore from Rs 113.7 crore the previous year.

— Net profit for FY14 increased to Rs 23.2 crore as compared to Rs 19.8 crore in FY13.


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PE-backed Snowman Logistics’ IPO fully covered on day 2 led by retail investors

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