Stock Holding Corporation of India Limited (SHCIL) is eyeing to raise at least INR7.5 billion through its initial public offering (IPO), although it may end up raising as much as INR9 billion. The custodian and depository service provider has invited bids from banks for managing the IPO. Bids have been invited in two phases: one for listing advice and second for lead manager of the issue. Banker selected at first stage would advice the company regarding dilution of stake and get essential approvals from the Securities and Exchange Board of India (SEBI).
The proposed issue would include fresh issue and offer for sale from some of its existing shareholders. Around 25% of company’s equity is proposed to get diluted via this issue. As a result, Stock Holding Corporation is expected be valued at about INR 20-22 billion.
Purpose of the issue
Stock Holding Corporation is planning to root itself into non-banking financial services business. The proceeds of the IPO will be used for business expansion purpose.
Incorporated in 1986 as a public limited company, Stock Holding Corporation is a subsidiary of Industrial Finance Corporation of India (IFCI). IFCI is a government owned development bank that caters to the long-term finance needs of the infrastructure and industrial sector for implementation of government’s industrial policy initiatives. The functions of the IFCI include grant loans and advances (in rupees and foreign currencies) to industrial concerns and underwriting the issue of stocks, bonds, shares etc.
Stock Holding Corporation’s total revenue stood at INR3.4 billion in FY 2015, up 16% from last year. In the same timeframe, its profits jumped 44% to INR780 million.
IFCI brought 17% stake from ICICI Bank last year for INR818 per share value, thus, becoming the biggest shareholder in SHCIL. IFCI also bought around 19% equity in SHCIL from IDBI Bank for INR3.4 billion which increased its holding to 52.86%. Among other prominent investors are UTI-SU and Life Insurance Corporation (LIC) with 17% and 15% shareholding respectively. General Insurance Corporation (GIC), United India Assurance, New India Assurance, Oriental Insurance and National Insurance hold 2.99% shareholding each in the company.
SHCIL is the leading player among the domestic custodians. Other players in the market include SBI Share Holding Corporation, Canbank Computer Services UTI Infrastructure Technology and India Clearing & Depository Services.
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Indian IPO market at a glance
SHCIL joins the long list of companies looking to raise IPO funds on the back of a strong secondary market. This year has proved to be better as compared to the last two years. Till now there have been 15 IPOs with over INR63.5 billion raised. Last FY, INR INR14.79 billion was summed and INR16.45 billion in FY 2013. This week Coffee Day Enterprises Limited is planning its IPO for raising INR11.5 billion. InterGlobe Aviation too plans its INR25 billion IPO by the end of this month.