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Varun Beverages eyes $1.2 bn valuation in IPO

19 October, 2016

Ravi Jaipuria-controlled Varun Beverages Ltd is seeking a market valuation of up to Rs 8,000 crore ($1.2 billion) after fixing the price band for its initial public offering at Rs 440-445 a share.

The public offering, which is a mix of a fresh issue of shares and an offer for sale by promoters, will open on 26 October and close two days later, the company said in a statement on Wednesday. 

The company aims to raise up to Rs 667.5 crore through a fresh issue of 15 million shares. In addition, there is an offer for sale of around 10 million shares by the promoters that could fetch them up to Rs 445 crore. 

Varun Beverages had filed its draft red herring prospectus in June and got regulatory approval for the issue last month.

Kotak Mahindra Capital, Axis Capital, CLSA and YES Securities are the bankers to the issue.

Varun Beverages’ net revenue jumped from Rs 1,800 crore in 2012 to Rs 3,394.1 crore for the year ended December 31, 2015. In the same period, its net profit rose from Rs 25 crore to Rs 87 crore.

The firm counts AION Global, the special situation investment firm jointly run by Apollo Global and ICICI Venture, and Standard Chartered Private Equity as investors. StanChart PE originally invested in 2011 while AION Global came in last year. AION Global bought some securities held by StanChart PE and pumped in Rs 300 crore afresh through subscription to non-convertible debentures in the company.

Both PE firms are retaining their stake. After the issue, StanChart PE will have a 7.5% stake in the firm while AION will hold 4%.  

Varun Beverages is one of the largest franchisees in the world (outside the US) of carbonated as well as non-carbonated beverages sold under brands owned by PepsiCo. It produces and distributes products such as Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Mountain Dew, Tropicana Slice, Nimbooz as well as packaged drinking water under the brand Aquafina. In addition, it has the franchise for Ole brand of PepsiCo products in Sri Lanka. 

India’s primary market, which opened up with the new government taking over in May 2014, has seen a number of marquee corporate names go public, especially in the past year. 

VCCircle’s quick look at the pipeline of IPOs shows 16 firms, including Varun Beverages, have received approval from the capital markets regulator Securities and Exchange Board of India for a public issue. Given that the approval is valid for one year, these firms have a reasonably long runway to test the waters.

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Varun Beverages eyes $1.2 bn valuation in IPO

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