Fairwinds Asset Managers Ltd-backed Shankara Building Products Ltd made a strong debut on the stock market on Wednesday with its shares listing at a premium of nearly 20% to the issue price.
Shankara’s shares started trading on the BSE at Rs 545 apiece, compared with the initial public offering (IPO) price of Rs 460, stock exchange data showed.
Subsequently, the stock moved higher at Rs 603 per share within 15 minutes of trading.
The stellar listing followed huge investor turnout for its IPO in the last week of March, when the public issue covered more than 41 times.
The IPO, which comprised 5.3 million shares, received bids for 217.21 million shares, or 41.02 times, for roughly Rs 10,000 crore ($1.52 billion), stock-exchange data showed.
IDFC Bank Ltd, Equirus Capital Advisors Pvt Ltd and HDFC Bank Ltd were financial advisors to Shankara Buildings’ IPO.
The Bangalore-based retailer of home improvement and building products, formerly known as Shankara Infrastructure Materials Ltd, is the fifth company to list on the bourses in 2017.
It joins hypermarket chain operator Avenue Supermarts Ltd, FM radio unit Music Broadcast Ltd , and stock exchange operator BSE Ltd in successful listings for this calendar year.
Late last week, Gaja Capital-backed CL Educate Ltd had made a disappointing debut on the stock market with its shares listing at a steep discount to the issue price.
Bengaluru-headquartered Shankara had filed its draft proposal with market regulator SEBI in September 2016. It had received regulatory approval on 22 December.
The Rs 354.4 crore-IPO, which resulted in a 33.7% stake dilution, helped the company raise Rs 50 crore ($7.5 million) via fresh issue of shares, which helped the company’s managing director Sukumar Srinivas and existing PE investor Fairwinds partially exit their investments in the company.
Fairwinds Asset Managers
Fairwinds, formerly Reliance Equity Advisors, is currently managing the PE fund raised under the erstwhile private equity arm of Reliance Capital. It would mark its third liquidity event through the Shankara IPO, according to VCCEdge, the data research platform of VCCircle.
Fairwinds had acquired a 34.8% stake in Shakara in 2011 for Rs 80 crore, valuing the firm at Rs 230 crore. It also had the right to invest an additional Rs 20 crore over the following two years, but had chosen not to exercise the option. It is now selling three-fourths of its holding in the proposed issue. In early 2016, it had sold its stake in school chain Pathways back to the promoters.
In yet another deal, Fairwinds had exited Amber Enterprises Pvt Ltd, one of the largest original equipment manufacturers of consumer durables in India, through a secondary deal. The private investment unit of Goldman Sachs Group Inc had acquired the stake.
Shankara Building Products
Shankara is one of the bigger organised retailers of home improvement and building products in India based on the number of stores operating under the trade name Shankara BuildPro, according to CRISIL. As of 24 September 2016, it used to operate 100 stores across 10 states.
It offers a range of products, including structural steel, cement, TMT bars, hollow blocks, pipes and tubes, roofing solutions, welding accessories, primers, solar heaters, plumbing, tiles, sanitary ware, water tanks, plywood, kitchen sinks, lighting and other allied products.
After growing 25% to Rs 1,765.5 crore in 2012-13, the company’s revenues slowed down to single digit for three consecutive years. It ended 2015-16 with a top-line of Rs 2,039.5 crore. Its net profit, however, grew sharply to Rs 41.6 crore, after declining for two straight years.
Retail sales contributed 39.68% of Shankara’s business last fiscal year, with enterprise sales bringing in 32.2% and channel sales rounding off the rest.
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