Noida-headquartered manufacturer of engineered systems and solutions Uniparts India Ltd has filed its draft red herring prospectus for floating its initial public offer (IPO) which would garner as much as Rs 300 crore, a little less than half of which would go to private equity firm PineBridge and the promoters, who are selling some of their shares in the issue.
VCCircle had first reported about the proposed public issue on September 22.
This comes as another PE-backed firm filing for a public float. The uptick in the stock market has prompted a slew of firms to file for an IPO. Click here to read more on how PE-backed firms are leading the charge to go public.
Snapshot of the proposed public issue
- Total 13 million shares on offer, 7 million fresh issue and a little over 6 million offer for sale by promoters and PE investor.
- IPO size: the size is expected to be in the range of Rs 240-300 crore depending on the issue price, which in turn would be in the range of Rs 185-230 a share.
- The issue comprises 25 per cent of the post issue paid up capital, valuing the firm at around Rs 960-1,200 crore.
- Bankers: Edelweiss, IIFL (formerly India Infoline) and ICICI Securities are managing the issue.
Business & promoter
- Uniparts is a manufacturer of agricultural and construction equipment.
- Promoted by first generation entrepreneurs, Gurdeep Soni (CMD) and Paramjit Singh Soni (VC).
- Founded in 1984, Uniparts' products include 3 point linkage (3PL), precision machined parts (PMP), power take-off, hydraulic cylinders, fabrication and gripwel fasteners. 3PL and PMP contribute bulk of its sales.
- It estimates that It has 19.2 per cent market share in the global 3PL market (in terms of value) and a 7.4 per cent market share in the global PMP market in the construction, forestry and mining (CFM) sector (in terms of value), in fiscal 2013.
- It supplies to over 25 countries in North and South America, Europe and Japan, primarily serving Original Equipment Manufacturers (OEMs), through global service delivery model based on dual-shore integrated manufacturing, warehousing and supply chain management systems and solutions.
- It also caters to the aftermarket requirements of its customers primarily in the agriculture sector.
- Uniparts' global OEM customers include Deere & Company (John Deere), GKN Walterscheid Gmbh (GKN), Tractors and Farm Equipment Limited (TAFE), Bobcat (a Doosan company) and Kubota Corporation (Kubota). It also has relationships with several aftermarket players in Europe and the US, such as Kramp and Blount International Inc. (Blount).
- The firm has facilities in India, the United States and Europe. In India, it has five manufacturing and distribution facilities, two at Ludhiana, one at Visakhapatnam and two at Noida. In the US, it has a manufacturing, warehousing and distribution facility at Eldridge in the state of Iowa, acquired in 2005 (earlier called Olsen Engineering LLC, now known as Uniparts Olsen Inc) and a warehousing and distribution facility at Augusta in the state of Georgia. In Germany, it has set up a warehousing and distribution facility in Hennef, which serves as our base for serving our key European customers.
- International sales accounts for around 89-90 per cent of consolidated revenue from operations.
Revenues
Consolidated revenues in fiscal 2014, 2013 and 2012 aggregated to Rs 817 crore, Rs 796.3 crore and Rs 839.9 crore, respectively, with the agriculture sector accounting for over two thirds of the sales and rest coming from the CFM sector.
Its consolidated Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) in fiscal 2014, 2013 and 2012 aggregated to Rs 91.4 crore, Rs 79.7 crore and Rs 69.5 crore, respectively, and consolidated PAT aggregated to Rs 43.5 crore, Rs 39.1 crore and Rs 26.1 crore, respectively in the same period.
Objects of the issue
From the roughly Rs 130-160 crore that the firm will get from the IPO, around Rs 80 crore will be spent to set up one new manufacturing unit at Vishakhapatnam and Ludhiana each; Rs 30 crore for prepayment of debt and the balance on acquisitions and other strategic initiatives.
Investors
The firm had previously raised around Rs 83 crore ($21 million then) funding from American insurance giant AIG's private equity unit in 2007 (and 2009 through a rights issue). Now under PineBridge, the PE investor owns 20.68 per cent stake. It is selling just under half of its holding in the company in the proposed issue.
PineBridge would get a little over 2x on its seven years old investment.
Its holding would shrink to around 10.2 per cent stake.