Coffee Day Enterprises gets Sebi nod for Rs 1,150-crore IPO

MUMBAI: Market regulator Sebi has given its nod to Coffee Day Enterprises to launch an initial public offering, according to the bankers. India's largest coffee chain, is planning to raise about Rs 1,200 crore through an initial public offering to expand its retail network and reduce debt.

“Sebi approval came couple of days ago. We are currently planning to do marketing and issue should hit the market in couple of months” said a banker to the issue.

The Sebi IPO approval has a validity of one year. So far in 2015, 10 companies have raised about Rs 4,700 crore from IPOs.

According to the draft prospectus, the operator of Cafe Coffee Day outlets plans to use Rs 632 crore to repay loans and the rest to open stores, manufacture vending machines and set up roasting facilities. The company also plans to open over 215 Cafe Coffee Day outlets and 105 kiosks in the next two financial years," it said.

Kotak Mahindra Capital, Citigroup Global Markets and Morgan Stanley are the bankers for the issue, while Cyril Amarchand Mangaldas is the legal counsel to the company.

VG Siddhartha, the main promoter, who is also chairman and MD, holds a 54.78% stake in the company, while all the promoters together have a 92.75% holding. Among the other major shareholders, Kohlberg Kravs Roberts & Co has 3.43% and Nandan Nilekani, Infosys co-founder and former chief of UIDAI, holds 1.77%.

Coffee Day Enterprises posted a net loss of Rs 10.9 crore and a consolidated revenue of Rs 875 crore for the nine months ended December 31. On an annualised basis, sales growth was stagnant compared with Rs 1,144 crore in FY14.

The company shut over 300 coffee shops in the past three years due to poor location, among other factors, and said it will continue to close 25 to 40 outlets every year. It runs 1,423 outlets across 209 cities in India and 16 stores in Austria, the Czech Republic and Malaysia.