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Kedaara-backed Mahindra Logistics’ IPO nears half-way mark on first day

31 October, 2017

The initial public offering of Mahindra Logistics Ltd, which counts homegrown private equity firm Kedaara Capital as its backer, reached near the half-way mark on the first day of the sale on Tuesday led by bids from individual and institutional investors.

The offering of 13.57 million shares, excluding the anchor allotment, was subscribed 48.5% after receiving bids for 6.58 million shares, stock-exchange data showed.

Retail investors, whose bid value cannot exceed Rs 2 lakh per application, bid for nearly 76% of the 6.72 million shares set aside for them. The portion reserved for qualified institutional buyers was subscribed 35%.

Non-institutional investors—comprising high net-worth individuals and corporate bodies—subscribed to 3% of the shares earmarked for them.

The IPO of Rs 829.35 crore ($128 million) comprises entirely a sale of 19.33 million shares by parent Mahindra & Mahindra Ltd and Kedaara.

On Monday, the logistics arm of the diversified Mahindra Group raised Rs 247 crore ($38 million) by selling shares to anchor investors including PremjiInvest, the family office of Wipro Ltd chairman Azim Premji, and Goldman Sachs ahead of the IPO. It sold 5.76 million shares to 15 anchor investors at Rs 429 apiece.

Other foreign anchor investors included UK-based First State Investment ICVC, Canada’s Alberta Teachers’ Retirement Fund (through Wellington Trust Company), Swiss private bank and asset manager Pictet and Amundi Funds. The investors also included a bunch of domestic mutual funds.

Mahindra Logistics is seeking a Rs 3,051.98 crore ($470 million) valuation through the IPO. The IPO will result in nearly 27.2% stake dilution on a post-issue basis.

M&M, India’s largest utility vehicle maker, and Kedaara will each sell 9.66 million shares through the IPO. Mahindra Logistics is not selling any fresh shares.

After the issue, M&M’s stake in the logistics company will drop to about 58.77% from 72.36%. Kedaara Capital’s stake will decline to 9.4% from about 23% it held through its investment arms Normandy Holdings and Kedaara AIF.

Kotak Mahindra Capital Co and Axis Capital are the merchant bankers managing the IPO.

Mahindra Logistics was set up in 2007 and is among the 151 Indian and overseas subsidiaries of Mahindra Group. It provides logistics solutions, warehousing facilities, freight forwarding and supply chain management services.

Mumbai-based Mahindra Logistics will join a clutch of logistics companies listed on the stock exchanges. Snowman Logistics, VRL Logistics, Allcargo Logistics, Sical Logistics and Aegis Logistics are among a dozen listed peers.

It is the first company in which homegrown private equity firm Kedaara Capital had invested. The PE firm had, in 2014, agreed to invest Rs 200 crore ($33.1 million then) for a 23% stake.

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Kedaara-backed Mahindra Logistics’ IPO nears half-way mark on first day

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