In a presentation in Mumbai today, Coffee Day said it is eyeing a valuation of as much as Rs6,750 crore ($1.04 billion) based on the issue price of its initial public offering.
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The company, which operates under the Cafe Coffee Day (CCD) brand and competes with global giant Starbucks in the fast-growing Indian coffee chain market, has fixed a price band of Rs 316-328 per share for its IPO. They are looking to raise appx Rs. 11.5 Billion with dilution of approximate 17.55% of its share.
The IPO proceeds will be used to further expand the chain of the coffee shops and repay debts.
“We will open 135 new stores every year”, he added. “The surplus of Rs 125 crore will also go towards the coffee business”, V G Siddhartha, chairman of Coffee Day Enterprises said here.
The promoter’s family has been in coffee plantation business since 1870 and are also one of the largest coffee bean exporters in India.
The company has an over 16 per cent stake in IT firm Mindtree.
#2 Coffee Day Enterprises is the parent company of the Coffee Day Group and operates coffee business through a subsidiary, Coffee Day Global Ltd (earlier known as Amalgamated Bean Coffee Trading Company Limited) and its subsidiaries. In the nine-month period ending December 2014, the company had a loss of Rs 75.2 crore.
The company in March 2015 issued shares to Nandan Nilekani, Rare Enterprises, Derive Investments, Ramesh Damani and Ketan Sheth & Sonal K Sheth as per details available in the red herring prospectus.
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India has seen fewer IPOs in the last few years because of volatile markets and slowing economic growth, and as a Reuters report suggests, the response of foreign and local investors to this offering will be a test of appetite for new issues in the current climate.
