S Chand files prospectus for INR300 crore IPO

S Chand files prospectus for INR300 crore IPO

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S Chand IPOTextbook publisher S Chand and Company has filed draft prospectus for launching its upcoming IPO. The New Delhi-based publisher is backed by Everstone Group and World Bank’s investment arm International Finance Corporation (IFC). S Chand IPO will include a fresh issue of up to INR300 crore (INR3 billion) which will be used towards repayment and prepayments of loans. This amount includes the loans a subsidiary recently took to acquire Kolkata-based publisher Chhaya Prakashani.

Everstone to part exit in S Chand IPO

S Chand IPO will also include an offer for sale (OFS) of up to 6 million equity shares by existing shareholders. According to the DRHP, the OFS will primarily be led by E
verstone which plans to sell 4,814,736 shares. Everstone currently holds 9,629,472 shares or 32.3% equity stake in the publisher. Everstone first invested in S Chand in 2012 and has been putting money in subsequent transactions.

Among other sellers are Himanshu Gupta, Dinesh Kumar Jhunjhnuwala, Neerja Jhunjhnuwala, Nirmala Gupta, Savita Gupta, Ankita Gupta and Gaurav Kumar Jhunjhnuwala. Most of the sellers in the OFS are either promoters or belong to promoter group.

Read Also: Everstone-backed S Chand initiates discussions with bankers for IPO

But IFC to stay put

S Chand counts IFC as another high profile firm among its investors. IFC owns 2,805,784 shares amounting to 9.4% equity stake but will not be selling its shares through S Chand IPO.

Acquisition-led growth

S Chand publishes a variety of educational books catering to school going students up to 12th standard (or K-12) as well as to students in colleges and universities. Apart from K-12 segment, S Chand also publishes books for competitive exams.

In its prospectus, the company said its sales have been increasing regularly for the last four years and stood at INR540.6 crore for the year ended March 2016. Net profit of the company for FY2016 was recorded at INR46.6 crore, its highest in the recent years. Unlike the steady revenue growth, profitability of the company has been volatile.

The growth in revenues has been spectacular, especially considering that its top line stood at just INR174.6 crore in FY2012. Much of this growth has come from acquisitions in recent years which have been facilitated by private equity investments. Apart from the acquisition of Chhaya Prakashani mentioned above, S Chand acquired a majority stake in Delhi-based publisher New Saraswati House in 2014.

Going forward, it expects digital and services businesses to drive growth. S Chand hopes to generate nearly 25% of its annual revenues from these businesses by 2020 and has been making acquisitions and investments accordingly.

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