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Temasek-backed Godrej Agrovet files for IPO

19 July, 2017

Godrej Industries Ltd’s agri-business subsidiary Godrej Agrovet Ltd, which is backed by Singapore state investment firm Temasek Holdings, on Wednesday filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offering.

The IPO comprises a fresh issue of shares worth Rs 300 crore besides an offer for sale (OFS) by promoter Godrej Industries and V-Sciences Investments Pte, the investment arm of Temasek.

Temasek, which holds a 20% stake in the firm, has proposed to sell 12.3 million shares, marking a part-exit. Adi Godrej-led Godrej Industries did not disclose the quantum of shares it aims to sell through the IPO.

The total issue size is estimated at Rs 1,200 crore, two persons privy to the development told VCCircle.

It will be the first IPO by a Godrej company in more than eight years. Godrej’s real estate arm Godrej Properties went public with a Rs 500-crore IPO in December 2009.

It becomes the 23rd company to files its DRHP with SEBI this calendar year.

In July last year, Adi Godrej had told Bloomberg that Godrej Agrovet may be listed in the future. However, he had not provided any details on the timing or valuations.

VCCircle previously reported that the company is seeking a valuation of Rs 6,500-7,000 crore ($1.01-1.10 billion).

Temasek had invested in Godrej Agrovet in in December 2012, picking up almost a fifth of the company for Rs 572 crore ($105 million then). This was the single-largest alternative investment in the agri-business segment in India and valued Godrej Agrovet at around Rs 2,860 crore ($525 million then).

At the asking valuation of around $1 billion, Temasek would be sitting on 2.5 times gains in local currency terms and two times gains in US dollar terms.

Godrej Agrovet is the largest manufacturer of compound feed in India, producing 1.1 million tonnes of feed and nutrition products for dairy cattle, poultry and aquaculture annually. It also has palm oil plantations and makes hybrid seeds.

Here’s a snapshot of Godrej Agrovet’s proposed IPO

Issue: The company plans to raise Rs 300 crore by a fresh issue of shares besides an offer for sale by promoters and private equity backer Temasek.

Singapore’s sovereign investment firm Temasek will sell 12.3 million shares, representing a third of its current shareholding. Temasek currently holds 37 million shares, representing 20% of the pre-issue equity.

The total issue size is pegged at Rs 1,000-1,200 crore.

Bankers: Kotak Mahindra Capital Co, Axis Capital and Credit Suisse Securities (India) are merchant bankers for the proposed IPO.

Lawyers: Godrej Industries and Godrej Agrovet have appointed Cyril Amarchand Mangaldas as their legal adviser.

The merchant bankers have appointed Luthra & Luthra Law Offices as Indian counsel and Sidley Austin LLP as their international legal adviser.

Temasek has appointed J Sagar Associates as its legal adviser for the IPO.

Company: Godrej Agrovet, which was incorporated in 1991, is a diversified, research and development-focused agri-business company of the 120-year-old Godrej conglomerate.

It operates in five main business verticals such as animal feed, crop protection, oil palm, dairy as well as poultry and processed foods.

The company ranked fourth among India’s animal compound feed producers in terms of sales volume in financial year 2015-16, according to a report by rating agency CRISIL.

The animal feed business vertical accounted for more than 52% of its total revenues for financial year 2016-17, according to DRHP.

Financials: Godrej Agrovet reported net profit of Rs 273.53 crore for financial year 2016-17 on total revenues of Rs 4,983.29 crore. The company’s total revenues stood at Rs 3817.66 crore in financial year 2015-16 compared with Rs 3325.48 crore in the previous year.

The company reported a net profit of Rs 260.97 crore in financial year 2015-16 compared with Rs 210 crore in the previous year.

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Temasek-backed Godrej Agrovet files for IPO

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