TA Associates-backed TCNS Clothing slips on trading debut

TCNS Clothing Co. Ltd, which owns the W brand of womenswear, made a weak debut on the the stock markets with its shares falling a tad from the initial public offering price.

Shares of TCNS Clothing, which is backed by US-based private equity firm TA Associates, started trading on the BSE at Rs 715 apiece compared with the Rs 716 issue price. The shares rose to a high of Rs 724.50 and fell to a low of Rs 672.90 in early trade.

The benchmark Sensex was little changed in morning trade.

TCNS Clothing is the 17th company to list on the main board of the stock exchanges in 2018. Eleven of the previous 16 companies had gained on debut this year.

The company’s IPO was subscribed 5.2 times on the back of demand from institutional investors, although retail investors’ portion wasn’t fully covered.

The public issue comprised a sale of 15.71 million shares by TA Associates, the promoters and other individual shareholders. The company didn’t raise any fresh capital from the IPO.

TA Associates harvested high returns by partially exiting the company, VCCircle had reported previously. After the IPO, the PE firm’s stake in the company has fallen to 29.38% from 40.65%.

The size of the IPO was Rs 1,125.12 crore ($164 million) and resulted in dilution of a 25.62% stake.

TCNS Clothing had sought a valuation of about Rs 4,390.37 crore through the IPO.

Ahead of the IPO, the company raised Rs 337.53 crore from 33 anchor investors including local PE firm ChrysCapital, foreign portfolio investors, domestic alternative investment funds and mutual funds.

It had filed its IPO proposal with the Securities and Exchange Board of India on 26 February. It received regulatory nod for its IPO on 4 May. Kotak Mahindra Capital Co. and Citigroup Global Markets India were the merchant bankers for the IPO.

TCNS makes and sells contemporary ethnic wear, targeting women between the ages 25 and 40. It entered retailing in 2002, when it set up its first outlet in the national capital of Delhi.

The company sells its products through more than 420 exclusive brand outlets, 1,305 large-format outlets and 1,361 multi-brand outlets in 29 states and two Union Territories in India. It also sells its products through its own website and online retailers. It has presence through exclusive brand outlets in Nepal, Mauritius and Sri Lanka.

Apart from W, the company has two brands—Aurelia and Wishful. W is a premium brand, which accounted for 61% of the company’s total revenue in the financial year 2016-17. Aurelia is a contemporary ethnic wear brand targeted at women and accounted for 30% of its revenue. Wishful is a premium brand for evening wear and occasions such as weddings, events and festivals.

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