Uniparts India Ltd, a manufacturer of engineering components which counts PineBridge Capital Partners LLC as its private equity backer, has received regulatory approval to float its initial public offering (IPO).
The Securities and Exchange Board of India (SEBI) issued final observations to Uniparts’ IPO proposal on 1 February, according to information made available on the regulator’s website.
Five companies, including Uniparts, have now received SEBI’s nod so far this year. Last year, SEBI had approved 72 IPO proposals, and in 2017, it had cleared 46.
Uniparts’ IPO, in which PineBridge is looking to exit its decade-long investment, comprises a fresh issue of shares worth Rs 100 crore besides a secondary sale of 13.06 million shares by the PE firm and others.
The IPO, whose size is estimated at Rs 500-550 crore ($70.55-77.61 million at current exchange rates), will result in 33-34% stake dilution. PineBridge Capital, the private equity and venture capital firm under global asset manager PineBridge Investments Holdings US LLC, has proposed to sell its entire holding of 9.33 million shares, representing a 20.68% stake in the firm.
Uniparts aims to use Rs 75 crore out of the fresh net proceeds to repay or make an advance payment of loans availed by it and an undisclosed amount will go towards general corporate purposes.
The engineering parts company is preparing to list after the general elections in May 2019 to avoid market volatility. More than four dozen companies are already looking to go public but many are now evaluating their options.
Uniparts does not have a like-to-like listed peer. But a successful IPO and listing on the exchanges will help it join companies such as Sandhar Technologies Ltd and Precision Camshafts Ltd, which manufacture engineering components used in automobiles and industrial equipment.
The Noida, Uttar Pradesh-based company had first filed for an IPO in September 2014 and had received regulatory approval in February 2015. However, it couldn’t launch its IPO then and the approval had lapsed.
Uniparts had raised around Rs 83 crore ($21 million then) in funding from insurance giant American International Group’s private equity unit in 2007 and 2009. American International Group later sold its businesses and assets in the aftermath of the 2008 financial crisis, resulting in PineBridge becoming independent.
Axis Capital, Motilal Oswal Investment Advisors and SBI Capital Markets are arrangers and managers to the share sale.
Founded in 1984, Uniparts makes systems and components for the off-highway vehicles (OHV) market, agriculture, and the construction, forestry and mining (CFM) space. Its products include three-point linkage (3PL), precision machined parts (PMP), hydraulic cylinders and fasteners. 3PL and PMP account for the bulk of its sales.
The company enjoyed 15.81% market share in the global market in 2017-18 (in value terms) and an estimated 9.02% market share in the global PMP market in the CFM sector in the same year (in value terms).
The company sells its products to various original equipment makers (OEMs) in 25 countries across North America, South America, Asia and Australia.
The firm has six manufacturing facilities (five in India and one in the US) and three warehouses and one distribution facility and a raw material storage space located across three continents, in proximity to several global OEMs in the OHV industry.
Uniparts counts global OEM players in the agriculture and CFM sectors such as Deere & Company, GKN Walterscheid Gmbh, Tractors and Farm Equipment Ltd, Doosan Bobcat North America, Kubota Corporation and Yanmar Co Ltd as its key clients.
In the aftermarket segment, its key clients are largely located in Europe and the US, such as Kramp.
That aside, the company continues to add new customers such as Kobelco Construction Equipment India Pvt. Ltd and Tractor Supply Co.
Uniparts reported consolidated net profit of Rs 44.17 crore for the six months ended September 2018 on revenue (from operations) of Rs 515.71 crore for the same period.
Its 2017-18 consolidated net profit was Rs 53.53 crore on revenue of Rs 846.18 crore for the same period.
In 2016-17, its net profit was Rs 26.52 crore on revenue of Rs 703.14 crore.