PE-backed TCNS Clothing’s IPO covered 5.2 times on final day
Photo Credit: Shah Junaid/VCCircle

The initial public offering (IPO) of TCNS Clothing Co. Ltd, which owns the W brand of womenswear, was subscribed 5.2 times on the third and final day on Friday on the back of sustained demand from institutional investors.

The public issue, excluding the anchor portion, received bids for 57.32 million shares by the end of day three. That translates to a little over 5.21 times the 10.99 million shares on offer, stock-exchange data showed.

The portion reserved for institutional buyers was subscribed about 13.5 times, while non-institutional investors bid for 5.07 times of the shares reserved for them.

However, retail investors was not particularly enthused, with the portion reserved for them subscribed just 55%.

The IPO had made a slow start on Wednesday, receiving just 10% subscription although it attracted a bunch of anchor investors including private equity investors and alternative investment funds ahead of the offering. It gathered steam on day two, receiving twice the demand for shares on offer.

The company, which counts US-based private equity firm TA Associates as an investor, raised Rs 337.53 crore ($49.3 million) on Tuesday from 33 anchor investors by selling 4.71 million shares at the upper end of the Rs 714-716 price band.

The anchor investors included a public market fund of homegrown PE firm ChrysCapital, foreign portfolio investors, domestic alternative investment funds and mutual funds.

ChrysCapital, through its public market investment vehicle Auburn, bought TCNS shares worth Rs 26 crore.

TCNS Clothing is seeking a valuation of about Rs 4,390.37 crore ($638 million) through the IPO. The public issue comprises a sale of 15.71 million shares by TA Associates, the promoters and other individual shareholders.

The IPO size is pegged at Rs 1,125.12 crore and will result in a dilution of 25.62% stake. The proceeds from the IPO will go to the selling shareholders and the company will not receive any money.

TCNS had filed its IPO proposal with the Securities and Exchange Board of India on 26 February. It received regulatory nod for its IPO on 4 May.

TA Associates will harvest high returns by exiting the company, VCCircle had reported previously. After the IPO, the PE firm’s stake in the company will fall to 29.38% from 40.65%.

Kotak Mahindra Capital Co. and Citigroup Global Markets India are merchant bankers for the IPO.

TCNS Clothing makes and sells contemporary ethnic wear, targeting women between the ages 25 and 40.

It entered retailing in 2002, when it set up its first outlet in the national capital of Delhi.

As on 30 September 2017, the company sold its products through 418 exclusive brand outlets, 1,305 large-format outlets and 1,361 multi-brand outlets in 29 states and two Union Territories in India. It also sells its products through its own website and online retailers. It has six exclusive brand outlets in Nepal, Mauritius and Sri Lanka.

Apart from W, the company has two brands—Aurelia and Wishful. W is a premium brand, which accounted for 61% of the company’s total revenue in the financial year 2016-17. Aurelia is a contemporary ethnic wear brand targeted at women and accounted for 30% of its revenue. Wishful is a premium brand for evening wear and occasions such as weddings, events and festivals.

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