RR Kabel plans ₹2,500-cr IPO, TPG to sell 11% stake

Electrical goods manufacturer RR Kabel has started the process to launch a ₹2,500-crore initial public offering. The company has hired investment banks Axis, JM, Citi and HSBC to run the listing process, said people aware of the development.

Currently, US private equity fund TPG Capital owns a 21% stake in RR Kabel, which is part of RR Global - a $1.25-billion (over ₹10,300 crore) revenue conglomerate in the electrical sector with a presence in more than 90 countries. This proposed IPO is likely to value the company at ₹14,000-15,000 crore, said the people. TPG Capital will sell about 10-11% stake through the IPO, while the rest of the issue will comprise fresh shares, they said.

A TPG spokesperson declined to comment, while an email sent to RR Kabel managing director Shreegopal Kabra did not elicit any responses till press time on Wednesday.

Last week, news agency PTI, citing Kabra, reported RR Kabel's plan to make an IPO in 2023.

The company offers a wide range of premium wires and cables for residential, commercial, industrial, and infrastructure purposes. It also sells fans, lights and appliances. RR Kabel posted revenue of ₹4,800 crore in fiscal year 2022 and expects that to grow to ₹6,000 crore in the ongoing FY23, Kabra had said.

In 2018, US private equity giant TPG acquired the minority stake in RR Kabel for about ₹650 crore, valuing the firm at around ₹3,000-3,250 crore. At present, the consumer segment accounts for about 70% of RR Kabel's revenue. About 15% of its revenue comes from fast-moving electrical goods and the rest is from wires and cables.

The cable industry is fragmented, with the presence of organised as well as unorganised players, leading to price competition, and the resultant pressure on margins.