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Sharda Cropchem lists with almost 63% premium

23 September, 2014

Mumbai-based agrochemical firm Sharda Cropchem Ltd’s has made a strong debut listing on the bourses at Rs 254.1 a share, 62.8 per cent premium to the issue price of Rs 156. It ended the first day at Rs 231.45 a share on the BSE, 48 per cent over the issue price, in a weak Mumbai market on Tuesday. It currently has a market cap of Rs 2,088 ($345 million).

This is the second company to list after the new government took over in May and the third since January 1 this year.

The public issue had seen bids worth around 60x or recorded oversubscription of 59x.

Earlier, it had roped in Kuwait Investment Authority, the sovereign wealth fund of Kuwait, as an anchor investor. The issue, in which its private equity backer Henderson Equity Partners exited, saw the secondary sale of around 25 per cent stake. No money went into the company.

Early this month Snowman Logistics Ltd, a cold chain unit of Gateway Distriparks Ltd, made a blockbuster debut listing on the bourses with 61 per cent premium to the issue price and ended the first day rising 67.5 per cent. After hitting a high, the stock price has moderated but investors in the IPO have doubled their money within a month.

Early this year in May Wonderla Holidays saw through a successful IPO which was subscribed 38x or oversubscribed 37x and listed with 32 per cent premium to the issue price. The share price has rocketed since then and is currently trading at a premium of 146 per cent to the issue price.

Here’s a snapshot on the Sharda Cropchem IPO:

– Issue opened on September 5; closed on September 9.

— Issue price band: Rs 144-156 per share; issue price Rs 156.

— Public offer of 22.55 million shares (including anchor investor portion) through offer for sale by PE investor and promoters.

— The company did not get any proceeds from the IPO which raised up to Rs 352 crore ($58 million).

— Equity dilution of 25 per cent.

— Issue managers: Edelweiss Financial Services and IDFC Securities.

– Anchor investors: Kuwait Investment Authority, the sovereign wealth fund of Kuwait, is among the group of anchor investors. The anchor investors also include domestic mutual fund schemes besides a clutch of foreign institutional investors.

Subscription stats

— Overall issue subscribed 60x.

— QIB portion subscribed 32x.

— HNIs and corporate bodies bid for 251x of their quota.

— Retail investors bid for 5.4x of the issue reserved for them.

Business

— The firm is engaged in marketing and distribution of crop protection chemicals globally. In the non-agro-chemical business, it is involved in order-based procurement and supply of general chemicals, dyes and dye intermediates. It has primarily grown organically and recently entered into the biocide segment and has acquired several registrations from the existing registration holders, primarily, in Europe.

— Agrochemical value chain: basic and applied research; identification of new product and registration opportunities; seeking registrations; manufacture of the active ingredient; formulation and packaging; marketing and distribution.

— The company has an asset light business model focusing on identification of generic molecules and registration opportunities, preparing dossiers and seeking registrations for formulations and generic active ingredients.

— As of August 5, 2014, it had over 180 Good Laboratory Practices (GLP) certified dossiers and as of July 15, 2014, owned over 1,040 registrations for formulations and over 155 registrations for generic active ingredients across Europe, Latin America and the rest of the world.

— As of August 5, 2014, it has filed over 500 applications for seeking registrations globally which are pending at different stages.

— Distributed formulations and generic active ingredients in over 60 countries across Europe, Latin America and rest of the world as on August 5, 2014.

Strategy

— Concentrate on forward integration through own sales force in existing markets

— Strengthen distribution presence in the existing and new markets, including highly regulated markets, by leveraging existing portfolio of formulations and generic active ingredients.

— Increase the scale of biocide registration organically and inorganically and focus on their marketing and distribution.

— Pursue opportunities of inorganic growth through strategic acquisitions and partnerships. In November 2011, it acquired 76 per cent stake in Axis Crop Science Private Limited, a company focused on marketing and distribution of formulations in India. This has enabled it to establish presence in the Indian market.

Investor

— Private equity firm Henderson Equity Partners had picked up 15.87 per cent stake in the company in 2008 for Rs 100 crore.

— It has now exited the company and got Rs 223.4 crore, translating into 2.2x on its six-year-old investment.

Financials

— The firm ended FY14 with total revenues of Rs 814.74 crore against Rs 792.6 crore in the previous year. Net profit in the same period rose from Rs 84.37 crore to Rs 106.9 crore.

— For FY14, its geographic spread of revenue from operations in agrochemicals stood at: Europe (61.34 per cent), Latin America (19.97 per cent) and rest of the world (9.45 per cent).

(Edited by Joby Puthuparampil Johnson)


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Sharda Cropchem lists with almost 63% premium

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