Sequoia-backed Prataap Snacks is looking to raise INR400-500 crore through its initial public offering (IPO). According to a report in Mint business daily, the Indore-based company may hire merchant bankers very soon as discussions have been under progress for some time.
The discussions have been going on for some time; they plan to hire merchant bankers very soon to start work on the IPO
– one of the sources Mint contacted.
The IPO will be a mix of fresh issue of shares and an offer for sale (OFS) from Sequoia. IPO proceeds will be used to expand the business, increase manufacturing capacity and invest in new products. Prataap Snacks makes and sells potato chips and other snacks under the Yellow Diamond brand. The company has also added noodles to diversify its product range from potato-based snacks.
The sources added that the company was earlier looking to raise funds from private investors but has now dropped the plans in favour of tapping public markets. In 2011, Sequoia invested USD30 million in the regional player which was started by Amit Kumat, Apurva Kumat, and Arvind Mehta in 2003.
Despite operating in the same industry, Prataap Snacks does not directly compete with big players like Frito Lays and Parle. Instead, it focuses on underserved smaller markets – a business model perfected by Manpasand Beverages which brought its hugely successful IPO last year.
For a better understanding on how Prataap Snacks became successful, read this dated but excellent article on FirstPost.
Apart from Prataap Snacks, news is that Balaji Wafers – another industry player – is planning to bring its IPO. Gujarat-based Balaji Wafers is believed to sell 10% equity stake through the IPO.
Several Sequoia-backed companies have been active in India’s IPO market. While anti-virus maker Quick Heal Technologies recently came up with its IPO, microfinance lender Equitas Holdings will open its public offer on Tuesday, 5 April 2016. Sequoia is also an investor an Equitas rival Ujjivan which is also looking to raise public funds and has secured SEBI approval.