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PE-backed Snowman Logistics makes a blockbuster debut, lists with 61% premium

12 September, 2014

Snowman Logistics Ltd, a cold chain unit of Gateway Distriparks Ltd, has made a blockbuster debut listing on the bourses at Rs 76 a share, 61 per cent premium to the issue price of Rs 47, and ended the first day at Rs 78.46 a share, up 67.5 per cent on BSE in a flat Mumbai market on Friday.

This is the first company to list after the new government took over in May.

The public issue had seen bids worth almost 60 times or recorded around 59x oversubscription.

It is backed by Norwest Venture Partners, which is now sitting on 2x in unrealised gains on its one-year-old investment; IFC, which had part exited early this year and is now sitting on a multi-bagger; and Faering Capital, which came in as an anchor investor and has also seen its value of holdings rocket with the bumper listing.

Early this year in May Wonderla Holidays saw through a successful IPO which was subscribed 38x or oversubscribed 37x and listed with 32 per cent premium to the issue price.

Who lapped up the issue?

–Overall issue subscribed 60 times or oversubscribed 59x.

— Institutional buyers bid for almost 17x of the issue reserved for them.

— Retail investors bid for over 41x 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, came in at the end and bid for 221 times the issue size marked under their basket.

Here’s a recap on the key points of the IPO

-Issue opened on August 26; closed on August 28

— Issue price band Rs 44-47 per share; issue price Rs 47/share

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

— Raised Rs 197.4 crore ($33 million)

— Equity dilution of 25.23 per cent, valuing the firm at around Rs 782 crore ($130 million); current market cap of over Rs 1,300 crore (more than $215 million).

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 Foods 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 40.41 per cent post IPO.

–Mitsubishi Corporation and Mitsubishi Logistics Corporation together hold 11.58 per cent.

–IFC and Norwest Venture Partners own 9.27 per cent and 10.3 per cent, respectively, post issue.

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 compared with Rs 19.8 crore in FY13.

(Edited by Joby Puthuparampil Johnson)


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PE-backed Snowman Logistics makes a blockbuster debut, lists with 61% premium

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