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Sequoia-backed Prataap Snacks refiles draft papers for IPO

27 June, 2017

Prataap Snacks Ltd, which makes Yellow Diamond chips, has refiled its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India for an initial public offering (IPO).

One of its existing shareholders Sequoia Capital Investments-II (SCI) converted the compulsorily convertible preference shares (CCPS) into equity, becoming a promoter entity and changing the overall shareholding structure.

“Sequoia has been reclassified as promoter following which the IPO document had to be refiled. The issue size remains unchanged,” a person with direct knowledge of the matter told VCCircle.

According to the new DRHP, SCI was allotted 5.79 million shares pursuant to the conversion of 96,545 CCPS held by it, as per a board resolution passed on 26 May. This resulted in SCI’s shareholding increasing to 46.71% on pre-issue basis compared with 33.3% earlier, as per both the draft documents.

Other Sequoia arms—Sequoia Capital GFIV Mauritius Investments (SCG) and Sequoia Capital India Growth Investment Holdings I (SCI-GIH)—hold 13.1% and 3.34% stake, respectively, in the company post the CCPS conversion, the fresh DRHP shows.

Sequoia, through its investment arms, is now looking to sell 1.78 million shares in a part exit compared with 2.2 million shares it had proposed to sell at the time of filing of Prataap Snacks’ old DRHP.

The Indore-based company, which filed its DRHP last October, plans to raise Rs 250 crore through a fresh issue of shares besides an offer for sale of 3 million shares including that by promoters and Sequoia.

The company received SEBI’s nod for the IPO on 13 April this year.

VCCircle reported that another Sequoia-backed company Geneis Colors Ltd is looking to refile DRHP with SEBI after receiving fresh investment from its private equity backer earlier in the year.

The company had filed its DRHP in September last year and received regulatory clearance in February this year as the fresh investment by Sequoia changed the shareholding resulted into a change in the shareholding pattern.

Prataap Snacks
Prataap Snacks had last year brought in a second private equity investor as a shareholder. Mid-market private equity firm Faering Capital picked up a 2.93% stake in the company last June by buying shares from promoters. It paid around Rs 45 crore for the stake, valuing the company at Rs 1,536 crore. Faering Capital’s investment in Prataap Snacks was first reported by VCCircle on 15 July.

The company’s entry into the public market would expand the basket of listed snacks makers. One of the listed firms, DFM Foods, which operates under the brand Crax, counts PE firm WestBridge Capital as a key shareholder.

Edelweiss, JM Financial and Spark Capital are managing Prataap Snacks’ IPO.

The firm plans to use the money for retiring debt (Rs 50 crore), setting up new production lines and modernising existing factories at Indore and Guwahati and a contract manufacturing facility at Bengaluru (Rs 72 crore), investing in subsidiary Pure N Sure, repaying debt (Rs 24 crore) and brand building activities (Rs 40 crore).

Prataap Snacks was started in 2003 by brothers Amit and Apurva Kumat and Arvind Mehta. It makes and sells potato-based snacks, extruded snacks and namkeen. Five years ago, it acquired the snack foods business of its group company, Prakash Snacks Pvt. Ltd and brought in the Yellow Diamond brand and the snack foods business under one umbrella.

The company has a presence in three major categories in India and all products are sold under the Yellow Diamond brand.

Sequoia has invested Rs 264 crore in multiple tranches in the company, of which Rs 135 crore was used to purchase shares from the promoters and the rest was invested in the firm.

For more details on the Prataap Snacks IPO, click here:

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Sequoia-backed Prataap Snacks refiles draft papers for IPO

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