The price band for the Rs 1,870-crore IPO has been set Rs 295-299 per equity share at face value of Rs 10 each. The minimum bid lot is 50 equity shares and is in multiples thereafter. The company is divesting 10 per cent of its total equity shares.
“Thirty-five per cent of the issue will be available to retail investors, 50 per cent to qualified institutional buyers or QIBs and 15 per cent to non-institutional bidders on a “proportionate basis”, the company said in a release.
Avenue Supermarts is one of the most profitable retailers in the country, and posted a Rs 300.92 crore profit after tax on revenues of Rs 8,800.03 crore in fiscal 2017 until December 2016.
Approximately Rs 1,080 crore from the net proceeds will be for reducing debt, which is currently at Rs 1,400 crore. Of the balance, Rs 366 crore will be utilised for funding expansion including construction and fit outs for new stores and Rs 424 crore for general corporate purposes, the company said in its draft red herring prospectus (DRHP).
The firm, valued at Rs 18,000 crore, is an emerging national supermarket chain, with focus on value-retailing.
Nine merchant bankers — Kotak Mahindra Capital, Axis Capital, Edelweiss Financial Services, HDFC Bank, ICICI Securities, JM Financial Institutional Securities, Inga Capital, SBI Capital Markets and Motilal Oswal Investment Advisors — will manage the Avenue Supermarts IPO.
MD Neville Noronha said at a press conference that the company aims to expand its business in the regions it currently exists in.
“The company believes in a cluster-based approach and we will continue to grow our business in the existing regions–western, southern and central India,” said Noronha at the press conference.
He identified Avenue Supermarts’ emphasis on “value retailing”, or keeping a restricted number of products per category, and ownership of its stores as its biggest value-creating factors.
D-Mart has presence in Maharashtra, Gujarat, Telangana, Karnataka and Andhra Pradesh, among other states. The company opened its first store in Mumbai, Maharashtra in 2002.
As of January 31, the company had 118 stores with a retail business area of 3.59 million sq.ft located across 45 cities in India.