Hospital chain and private healthcare services company Aster DM Healthcare Ltd and state-owned aerospace defence firm Hindustan Aeronautics Ltd besides two other firms have received regulatory approval for their initial public offerings.
SSG Capital-backed Future Supply Chain Ltd and Gandhar Oil Refinery (India) Ltd have also received SEBI's nod for an IPO.
This takes the tally of companies that have received regulatory approvals for their IPOs in calendar year 2017 to 38.
Aster DM and HAL received SEBI nod on 27 October. Future Supply and Gandhar Oil got clearance a day earlier, according to information on SEBI’s website.
Aster DM, which had earlier filed its DRHP for a $300 million IPO and also received final observations from the market regulator in November last year, decided to postpone its public offering due to expectations of lower valuations.
The offer comprises an issue of fresh shares worth Rs 775 crore besides an offer for sale of 11.67 million shares by promoter Union Investments Pvt. Ltd and 4.6 million shares by private equity backer Olympus Capital Asia Investments Pvt. Ltd.
The firm plans to use the money to purchase medical equipment (Rs 110.31 crore compared with Rs 255 crore proposed earlier) and for repayment of debt (557.31 crore against Rs 354 crore proposed earlier).
Its earlier plan was to mop up Rs 609-812 crore via a fresh issue of shares, VCCircle had reported.
The company has reduced its secondary offering to a total of 16.34 million shares compared with a proposed sale of 36.07 million shares. Another homegrown private equity backer, True North (Managers)—which was previously known as India Value Fund Advisors (IVFA)—will not be selling shares through the IPO, as proposed earlier.
Aster DM will join a clutch of pharmaceutical and healthcare companies that recently struck successful listing on the bourses.
These include Biocon Ltd’s contract research services arm Syngene International Ltd that went public in July 2015. Alkem Laboratories Ltd, India’s fifth-largest drugmaker as per domestic sales, tapped primary markets in December 2015 with a Rs 1,350-crore IPO followed by Warburg Pincus-backed Laurus Labs in November 2016.
The most recent pharmaceutical company to go public was Eris Lifesciences with a Rs 1,741 crore IPO in June this year.
A clutch of companies in the broader healthcare sector has also gone public in the past 18 months. These include diagnostics companies Dr Lal PathLabs Ltd and Thyrocare Technologies Ltd, and hospital chains Narayana Health and Healthcare Global Enterprises Ltd.
Kotak Mahindra Capital, Axis Capital, Goldman Sachs, ICICI Securities, JM Financial and Yes Securities are financial advisers to the issue.
Hindustan Aeronautics
A plan to list HAL was originally approved in 2012 but the firm faced disclosure-related hurdles as it did not want to make key or material information public. The company, in conjunction with its merchant bankers in 2013 sought an exemption from the market regulator but did not get one.
The long-awaited IPO is now scheduled for calendar year 2018. It comprises a complete secondary market sale of 36.15 million shares by the government. The sale will result in a 10% dilution in government’s stake which currently stands at 99.99%, according to the draft red herring prospectus (DRHP) filed late last month.
HAL will get three years from its listing date to meet the minimum public shareholding norms of at least 25% public float.
The issue size is estimated at Rs 1,500-2,000 crore ($225-300 million), two persons privy to the development told VCCircle.
A third person familiar with the development, however, pegged the issue size at more than Rs 2,000 crore as India’s defence sector is expected to see exponential growth under the government’s ‘Make in India’ initiative.
HAL, which makes military aircraft and helicopters, will become the first defence and aerospace sector OEM to list. There are no directly listed companies in India that engage in a business similar to that of HAL.
However, there are a clutch of directly and indirectly listed defence sector companies such as Bharat Electronics Ltd and Reliance Naval (formerly Reliance Defence Engineering), besides the Tata group, Mahindra & Mahindra, Larsen & Toubro and Cyient that also have dedicated defence and aerospace verticals.
HAL’s listed global peers include US firm The Boeing Co, European multination corporation Airbus SE, Lockheed Martin, United Technologies and General Electric.
HAL’s IPO, among many other public sector units’ (PSU) offerings, is part of the record disinvestment target for the current financial year to contain the fiscal deficit at 3.2% of the gross domestic product Finance minister Arun Jaitley has proposed to raise Rs 72,500 crore through capital receipts comprising minority sales, strategic disinvestments and listing of state-owned insurance companies such as General Insurance Corp (GIC Re) and National India Assurance (NIA).
HAL will not receive any proceeds from the issue. The IPO proceeds will go into government’s treasury.
SBI Capital Markets and Axis Capital are merchant bankers managing HAL’s IPO.
Future Supply
Retail entrepreneur Kishore Biyani-led Future Group's plan to take Future Supply Chain Solutions Ltd public comes at a time when stock markets are trading near record highs, prompting a raft of companies to float share sales.
The proposed issue will make Future Supply Chain Solutions Ltd the sixth Future Group firm to go public. Future Retail, Future Consumer, Future Market Networks, Future Enterprises and Future Lifestyle Fashions are already listed.
Future Supply Chain had considered a listing two years ago, but subsequently decided to raise capital through private equity firms.
In February 2015, the company’s board announced that it planned to sell shares either via an IPO or a PE stake sale. Soon after, in April 2015, Future Supply Chain issued convertible debentures to GTI Capital for $8.5 million, as per VCCEdge, the data research platform of VCCircle.
In April 2016, Singapore-based distressed assets fund management firm SSG Capital acquired a 40% stake in Future Supply. This deal valued the company at Rs 1,450 crore.
The IPO comprises an offer-for-sale by Future Enterprises and SSG Capital. SSG is planning to sell 7.8 million shares, or half of its 20% holding, while Future Enterprises, which owns a 57.4% stake, will sell 5%. The issue is expected to be worth over Rs 500 crore, valuing the company over Rs 2,000 crore.
Edelweiss, CITIC CLSA and Nomura are the global coordinators and book running lead managers for the IPO. IDFC, IIFL and Yes Securities are the other merchant bankers involved.
Peer group firm Mahindra Logistics, backed by homegrown private equity firm Kedaara Capital, is looking to raise Rs 829.35 crore ($128 million) through the share sale this week. The IPO comprises a secondary market sale of total 19.33 million shares by parent Mahindra & Mahindra Ltd and Kedaara.
