Everstone to make handsome gains from VLCC IPO

Health and wellness product and service firm VLCC Health Care Ltd has filed its draft red herring prospectus (DRHP) with capital markets regulator Securities and Exchange Board of India (SEBI) to float its initial public offer (IPO).

The offer comprises a fresh issue and an offer for sale by its promoters as well as existing private equity investor Everstone.

Here's a snapshot of the IPO

IPO comprises a fresh issue by the firm to raise Rs 400 crore besides an offer for sale by promoters and existing PE investor.

Bankers: ICICI Securities, Citigroup and Axis Capital.


* Founded in 1989 by Vandana Luthra, VLCC is into beauty and wellness services.

* The firm currently serves consumers across 301 locations in 134 cities and across 11 countries in South and Southeast Asia besides the GCC region and East Africa.

* As of July 31, 2015, it had 236 VLCC Wellness Centers of which 213 are under the VLCC brand and the 23 in Malaysia are under the Bizzy Body and Facial First brands.

* Of its 187 VLCC Wellness Centers in India, 60 are franchisee-owned. It also operates 49 VLCC Wellness Centers in UAE, Oman, Bahrain, Qatar, Kuwait, Kenya, Sri Lanka, Bangladesh, Nepal and Malaysia.

* There is only one centre in Nepal which is not owned and operated by VLCC.

* It also markets 169 skincare, hair-care, body-care, functional foods and fortified foods products and has a 72,000 strong distribution network in India.

* It competes with the likes of Marico Kaya besides several in the gymming business.

Use of proceeds

* The company will use the money to set up VLCC Wellness Centers and VLCC Institutes in India and will invest in its subsidiary to set up VLCC Wellness Centers overseas (Rs 145 crore); reduce debt (Rs 68.3 crore); develop brand (Rs 50 crore); build manufacturing facilities (Rs 28 crore) and for other purposes.


* The company's operational revenues more than doubled between FY11 and FY15 to Rs 811 crore but it has had a modest performance when it comes to profits. Net profit did double between FY11 and FY13 to Rs 35.54 crore but has been sliding since. Net profit declined to Rs 28.87 crore in FY14 and the firm closed the year ended March 31, 2015 with net profit of Rs 20.53 crore.

* The firm's sales from personal care products business grew faster than overall revenues during FY11-FY15, rising 2.63 times.


Everstone had invested Rs 50 crore in the firm back in 2007 and currently owns 15.11 per cent stake in the firm. This means it invested with an implicit valuation of around Rs 331 crore.

It is now looking to part-exit by selling just under half of its holding. Although the pricing of the issue is yet to be frozen, the PE firm that has just raised $730 million in its new fund, is expected to make big gains from the part-exit.

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