The initial public offer of Ahmedabad-based furniture-maker Timbor, backed by ad-for-equity media investors Bennett, Coleman & Co. Ltd and Dainik Bhaskar Group, has sailed through one day ahead of its closure, even though there is virtually no interest from any institutional investor or HNI, who would typically decide the fate of public issues.
The small size public issue was supported entirely by retail investors who have subscribed to almost three times the portion reserved for them till the penultimate day of the issue. Corporate Strategic Allianz Ltd is managing the issue.
The issue sailing through is also remarkable as just weeks ago, personal and home care products maker Galaxy Surfactants Ltd had withdrawn its on-going public issue, one day ahead of its closure, after poor response from HNIs and retail investors. Galaxy sought to raise up to Rs 201 crore by selling a quarter of the company’s shares, but was subscribed just 30 per cent on the eve of the penultimate day.
Ahmedabad-based Timbor is looking to raise as much as Rs 23 crore in the maiden public float which may value the firm at around Rs 93 crore ($20.5 million). Timbor is looking to use the proceeds from the issue for machinery purchase, establishing new stores across India and meeting additional working capital requirements.
The company markets its products under the brand names Timbor Cucine (modular kitchens), Timbor Doors (doors & door frames), Timbor Home (home furniture) and IKI Kitchens (hi-end kitchen solutions using ‘Hettich’ hardware and accessories).
However, poor participation from institutional investors and HNIs does put a question mark over the fate of the company after it debuts on the stock exchange. If the issue draws large investors on the last day, it can put some confidence back on the firm when it lists in a few days.
For the year ended March, 2010, the firm had a total income of Rs 51 crore with net profit of Rs 1.77 crore. The company, which was incorporated as Inside Outside India Dot Com Pvt Ltd during the days of dotcom boom, was renamed around four years ago. It is seeking high valuations at the issue price, which can explain the lack of interest from institutional investors.
Incidentally, one of the ad-for-equity media investor DB Corp’s (that runs the Dainik Bhaskar Group) two-and-a-half-year old bet in Timbor has gone underwater even as Bennett, Coleman & Co. Ltd (The Times of India group) is sitting on unrealised gains from its one-and-a-half-year old investment.
At the issue price band of Rs 54-Rs 63 a share, the Dainik Bhaskar Group has lost over half of its investment value while Bennett, Coleman & Co. is sitting on unrealised gains of 6x-7x, according to VCCircle estimates.
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