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    Saturday , May 07, 2016

   Dairy firm Parag Milk extends IPO till 11 May

   Publication: Mint , Journalist:ANKIT DOSHI
   Edition: Mumbai/Delhi/Ahmedabad/Pune/Chandigarh/Bangalore/Chennai/Hyderabad/Kolkata , Page No: 3 , Location: Top-Right , Size(sq.cms): 352
  

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SHARE SALE
price band fixed for the IPO.
IDFC Private Equity, the whol­ly-owned unit of IDFC Ltd, has offered to sell about 58.4% of its holding. The Mumbai-based entity, which holds about a 20.1% stake, will sell about 8.26 million shares, as per the company's share sale prospectus.
Other PE investors—India Excellence Business Fund (IBEF) and IBEF-1 sponsored by Motilal Oswal Financial Services Ltd—will sell 6.02 million shares.
In September 2012, Parag Milk raised Rs155 crore from IDFC Alternatives. Motilal Oswal had invested Rs55 crore in 2008.
Mint had in December 2013 reported that Parag Milk raised $15 million as a loan facility from the International Finance Corp. (IFC), a member of the World Bank Group. It raised the capital for expanding its milk-processing facilities and planned to expand supply-chain linkages, and improve food safety standards. The firm has been diversifying into value-added products such as whey powder and ultra-high-tem-perature milk.
Parag Milk, which manufac­tures and markets dairy-based branded products under the Gow-ardhan, Go and Pride Of Cows brands, filed its draft proposal for a stock exchange listing on 30 September. It received Sebi approval for the public issue on 29 December.
Parag Milk plans to use about Rs150 crore of the fresh capital to meet capital expenditure needs in relation to expansion and mod­ernization of existing manufactur­ing facilities and to improve the marketing and distribution infra­structure.
The remaining amount will be used towards repayment of debt and to meet the working capital needs.
In 2014-15, Parag Milk reported a revenue of Rs1,440.8 crore, up from Rsl,087 crore in the previous year. It reported a profit of Rs29.4 crore in 2014-15, up from Rs14.5 crore, as per the company's pro­spectus.
Dairy firm Parag Milk extends IPO till 11 May
Firm pares lower end of its 3220-227 price band as it fails to garner full subscription from institutional investors
By Ankit Doshi
ankit.d@Vwernint.com
MUMEA
D airy firm Parag Milk Foods Ltd on Friday said it had extended its three-day ini­tial public offering (IPO) by an additional three days to 11 May.
The firm also reduced by 2.3% the lower end of its Rs220-227 price band as it failed to gamer full sub­scription from institutional inves­tors. The revised band stands at Rs215-227 per share.
As of 5.30pm on Friday, the third and final day of the share sale, the Rs750-crore offering was subscribed a little over 1.32 times. However, the qualified institu­tional buyers (QIB) category failed to receive full subscription.
The portion set aside for institu­tions, excluding the anchor allot­ment, garnered close to 55% bids, data showed. The Securities and Exchange Board of India's (Sebi) Issue of Capital and Disclosure Requirements (ICDR) stipulate full subscription from institutions.
As per regulations, "...wherein at least 75% of the net issue shall be allotted on a proportionate basis to QIBs (the 'QIB portion')... If at least 75% of the net issue cannot be allotted to QIBs, the entire application money shall be refunded forthwith"
Non-institutional investors, or high net-worth individuals,
ordered 2.66 times the shares set apart for them; retail investors, whose share application in public issues cannot exceed Rs2 lakh each, bought 1.72 times the stock earmarked for them, data showed.
The firm is offering a discount of Rsl2 per equity share to retail investors and eligible employees.
In March 2015, Adlabs Enter­tainment Ltd and Ortel Commu­nications Ltd had received tepid responses to their IPOs. Adlabs was forced to lower its issue price as well as extend the bidding time by three days, whereas Ortel reduced its offer for sale (OFS) compo­nent, thereby paring the overall issue size for the public issue to sail through.
In a press note, Parag Milk said: "As there were regional holidays in Asia during the issue period, the company expects additional interest from QIBs in the extended issue period."
Kotak Mahindra Capital Co. Ltd, JM Financial Institutional Securities Ltd, IDFC Securities Ltd and Motilal Oswal Investment Advisors Pvt. Ltd are merchant bankers to the IPO.
Shares of Parag Milk were quot­ing at a premium of Rs3-4 per share on the grey market, compared with Rs5-15 per share on Wednes­day and Rs35-40 per share last week, two dealers said, requesting anonymity, adding that investor interest was subdued due to
NAkash07052016 - 0004-1.jpg
expensive valuations. "The issue is expensive, and interest in grey market is not much as people are not expecting to gain big on list­ing," said one of the dealers cited above.
The grey market is an over-the-counter market where IPO shares are bought and sold before a com­pany officially lists on the stock exchange.
Mint reported on Wednesday that domestic brokerage firms were divided on their views for the IPO.
IIFL Holdings Ltd, which has an "avoid" rating on the issue, said that at the upper IPO price band, the firm is richly priced related to the g r o w t h prospects and also the emerging competition, and even after a Rs12 discount to retail investors, the issue is still expensive, compared with peers.
Investment adviser S.P. Tulsian had also recommended that investors avoid the issue, citing high valuations.
Brokerage Prabhudas Lilladher Pvt. Ltd gave a "subscribe" rating and highlighted that while Parag has good long-term prospects with scope of decent returns over 2-3 years, it will offer limited gains at listing.
On Tuesday, Pune-based Parag Milk raised nearly Rs343 crore from anchor investors ahead of its IPO. It allotted 15.1 million shares to 17 anchor investors at Rs227 apiece, the upper end of the Rs220-227
 
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Dairy firm Parag Milk extends IPO till 11 May
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Date: Saturday , May 07, 2016
Publication: Mint, Journalist: ANKIT DOSHI
Edition: Mumbai/Delhi/Ahmedabad/Pune/Chandigarh/Bangalore/Chennai/Hyderabad/Kolkata, Page No: 3, Location: Top-Right, Size(sq.cms): 352