India’s IPO market is abuzz with the superb listing of TeamLease Services and the same is expected for Quick Heal later this week. Both the companies offered exit route to existing private equity investors. Despite the fact that investors made decent money in recent IPOs, latest IPO News is that several noteworthy IPO candidates like ACB India and Uniparts are staying away from the volatile secondary market which weighed heavily on grey market performance of recent IPOs.
While ACB (India) Limited let the IPO opportunity slip earlier this month, several sources have told IPO Central that Uniparts India is likely to follow suit. The Noida-based company – a manufacturer of engineered systems and solutions – received SEBI approval to bring the IPO on 19 February last year. According to SEBI guidelines, the observations are valid for 12 months and companies need to refile prospectus in the event of crossing the timeframe before bringing the public offer. So far, there is no update regarding filing of red herring prospectus or announcement of price band. A query sent by IPO Central to IPO’s lead manager ICICI Securities Limited remained unanswered.
Uniparts India planned to bring its IPO involving 1.30 crore shares – split between a fresh issue of 70 lakh shares while 40 lakh shares were to be sold by existing shareholders Ambadevi Mauritius Holding Limited and Ashoka Investment Holdings Limited. Including 20.4 lakh shares from selling individuals, the offer for sale (OFS) was at 60.4 lakh shares. Out of the net proceeds from sale of new shares, the company aimed to use INR80 crore towards setting up new manufacturing facilities at Ludhiana and Visakhapatnam while another INR45 crore was to be spent for debt reduction and acquisitions.
As seen above, the IPO comprised a heavy mix of OFS component and considering the weak and volatile situation in the general market, it was deemed too risky to bring the offer. ICICI Securities Limited, Edelweiss Financial Services Limited, and India Infoline Limited were to manage the IPO.
In a similar way, ACB (India) Limited also let the 12 month window close earlier in February. ACB India is backed by Warburg Pincus which invested nearly INR200 crore in the company in 2006 through its PineRidge Investment fund of funds. PineRidge currently holds nearly 5.21 crore shares in the company, amounting to 21.9% equity stake. The entire 3.09 crore share IPO was intended as an OFS by PineRidge (2.38 crore shares), Ganesh Chandra Mrig (31.4 lakh shares) and Ashok Mrig (40 lakh shares).
SEBI issued its observation regarding the IPO on 6 February 2015. This is second time for ACB India that the company has let the public offer slip. In 2011, the company filed DRHP and received SEBI approval in October 2012 but poor market conditions forced the company to shelve IPO plans.