Kitchen appliances manufacturer Stove Kraft Ltd has received regulatory nod to float an initial public offering, in what will be its second attempt to go public after its previous approval lapsed.
The Securities and Exchange Board of India (SEBI) issued final observations to Stove Kraft’s revised IPO proposal on April 30, according to information available on the capital markets regulator’s website.
This takes the number of companies to have received regulatory clearances so far this year to 16. SEBI had cleared 28 IPO proposals last year, 72 in 2018 and 46 in 2017.
Stove Kraft, which is backed by venture capital and growth-equity investment firm Sequoia Capital, had refiled in February. It had originally filed its draft red herring prospectus in September 2018 and received regulatory approval in January 2019. SEBI’s IPO approval is valid for one year, and Stove Kraft’s application lapsed in January this year. The company didn’t change the IPO size in the revised proposal.
SEBI had introduced two weeks ago a number of temporary relaxations for capital markets participants including reduced minimum subscription levels and allowed higher-than-stipulated revisions in IPO size. This was part of SEBI’s efforts to help market participants to tide over challenges due to the coronavirus pandemic and boost sentiment.
Stove Kraft plans to raise Rs 145 crore ($20.35 million) by selling fresh shares while its promoters and Sequoia will sell 7.16 million shares in the IPO.
Sequoia is looking to sell its entire stake in the company. It had invested in the Bengaluru-based company in two tranches, with the initial investment deal in 2010. It put in a total of Rs 110 crore in 2010 and topped it up three years later. It owns a stake of around 25.37% in the company.
The IPO is estimated at Rs 450-500 crore, according to a person in the know. The IPO may result in roughly 35-36% stake dilution and may value the company around Rs 1,400 crore, VCCircle estimates show.
A successful IPO and listing will see Stove Kraft join listed peers such as TTK Prestige, Butterfly Gandhimati and Hawkins.
Incorporated in 1999, Stove Kraft sells stoves and other small kitchen appliances under Pigeon and Gilma brands. It also plans to start making kitchen products under the Black + Decker brand, for which it already has a licensing agreement.
The company runs one factory each in Bengaluru (Karnataka) and Baddi (Himachal Pradesh). As on October 2019, the company had 429 distributors in more than 24 states across the country.
In October 2019, the company appointed Rajiv Mehta as the new chief executive officer. Mehta previously worked with sports goods brand Puma and was the CEO of Arvind Fashion Brands Ltd as well as Arvind Sports Lifestyle Ltd.
Edelweiss Financial Services Ltd and JM Financial Ltd are merchant bankers managing the IPO.