Sequoia Capital-backed Stove Kraft Ltd and International Finance Corporation-backed Polycab India Ltd have received regulatory nod to float initial public offerings.
The Securities and Exchange Board of India issued final observations to the IPO proposals of Stove Kraft and Polycab on 23 January and 25 January, respectively, according to SEBI’s website.
This takes the number of companies that have received SEBI’s nod to float IPOs to four so far in 2019. Last year, SEBI had approved 72 IPO proposals. In 2017, it had cleared 46 IPO proposals.
Through Stove Kraft’s IPO, US venture capital and growth-equity investment firm Sequoia is looking to sell half its stake. Sequoia had invested in the Bengaluru-based company in two tranches, with the initial investment deal in 2010.
Stove Kraft’s IPO size is estimated at Rs 450-500 crore, of which the company will issue fresh shares worth Rs 145 crore. At the time of filing the draft IPO prospectus, Strove Kraft was targeting a valuation of Rs 1,500-2,000 crore.
A successful IPO and listing will see Stove Kraft join listed peers such as TTK Prestige, Butterfly Gandhimati and Hawkins. While TTK Prestige commands a market value of nearly Rs 8,000 crore ($1.25 billion), Stove Kraft is of the same size in terms of business as Hawkins and Butterfly Gandhimati.
Stove Kraft is eyeing a valuation mark-up on Hawkins, which is a fairly steady profit-making company, and a sharp premium over Butterfly Gandhimati, which also had better profit margin.
Edelweiss, JM Financial and IDFC Securities are the merchant bankers managing the IPO.
Stove Kraft, which was launched in 1999, primarily offers hobs, cooktops, non-stick cookware, LPG gas stoves, chimneys and induction cooktops under Pigeon and Gilma brands. It is also planning to start manufacturing of kitchen solutions under the Black + Decker brand, for which it already has a licensing agreement.
The company runs one factory each in Bengaluru (Karnataka) and Baddi (Himachal Pradesh). The Bengaluru facility has an annual production capacity of 15 million units, with the capability to manufacture pressure cookers, non-stick cookware, LPG stoves, mixer-grinders and induction cooktops. The Baddi plant has an installed capacity of 1.8 million units per 300 days, with the capability to manufacture products such as LPG stoves.
The company, which makes electrical wires, cables and fast-moving electrical goods under the ‘Polycab’ brand name, is looking to float an IPO with an estimated size of Rs 2,000-2,500 crore through a combination of a fresh issue and a secondary sale.
Polycab has proposed to issue fresh shares worth Rs 500 crore and an offer for sale of 24.88 million shares by the promoter and promoter group shareholders, besides IFC.
IFC, the private-sector investment arm of the World Bank, is looking to sell half its stake in electrical equipment maker.
Mumbai-based Polycab is hoping to join listed peers such as Finolex Cables, KEI Industries, Diamond Power Infrastructure and Cords Cable Industries on the stock exchanges.
Kotak Mahindra Capital Co, Axis Capital, Citigroup Global Markets India, Edelweiss Financial Services, IIFL Holdings, and Yes Securities (India) are the merchant bankers managing the IPO.
Incorporated in January 1996 as Polycab Wires Pvt. Ltd, the company is India’s biggest manufacturer of wires and cables by revenue, according to ratings and research agency CRISIL. It had an 18% market share in the organised wires and cables industry and approximately 12% of the total wires and cables industry in India for the financial year 2017-2018.
The company also makes and sells electric fans, LED lighting and luminaires, switches and switchgears, solar products and conduits, and accessories. It has 24 manufacturing facilities, including two joint ventures with partners Techno Electromech Pvt Ltd and Trafigura Pte Ltd.
The company supplies its products to firms operating in power utilities, oil and gas, IT parks, metro rail, infrastructure, metal and non-metal, cement and EPC sectors in India and overseas. Polycab’s key clients include L&T Construction and Konkan Railway Corporation. International sales accounted for 5.14% of its total revenue for 2017-18.