Shankara Building Products Ltd, an organized retailer of home improvement and building material, has appointed an investment bank to raise up to ₹300 crore through a qualified institutional placement (QIP), said two people aware of the development.
Promoted by first-generation entrepreneur and IIM-Ahmedabad alumnus Srinivas Sukumar, this will be the second major fundraise for the company.
In March 2017, Shankara had raised ₹345 crore in an initial public offering, which was subscribed 41.6 times.
Since its listing on stock exchanges in April 2017, Shankara’s shares have risen over three times to close at ₹1,533.4 apiece on Monday. The company had sold its shares in the initial public offering at ₹460 each.
“The company has appointed ICICI Securities to advise on the fundraise. It is looking to raise capital for working capital needs, inorganic growth and expanding its retail footprint,” said the first of the two people cited above, both of whom requested anonymity.
A QIP is a capital-raising tool through which listed companies can sell equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into stocks, to a qualified institutional buyer.
“The company has been engaged in talks with investors on the QIP for a few weeks. However, given the volatility in the stock market, it is in a wait-and-watch mode,” said the second of the two people cited earlier.
On 12 June, Shankara’s shareholders had approved a resolution to allow it to raise ₹300 crore through various routes, including a QIP.
An email query to ICICI Securities did not elicit any response.
A spokesperson for Shankara Building Products said, “The company has taken an enabling resolution for raising funds, which is valid for 12 months. It has not decided on the timeline for the fundraise.”
The building material company’s range of products includes cement, structural steel, TMT bars, hollow blocks, pipes and tubes, roofing solutions, welding accessories, primers, solar heaters, plumbing, tiles, sanitary ware, water tanks, plywood, kitchen sinks, lighting and other related products.
Shankara sells products under its own brands, including CenturyRoof, Ganga and Loha, apart from third-party merchandise.
According to the filings with Registrar of Companies, Shankara owns 131 stores with a retail footprint of 0.51 million sq. ft across nine states and one Union territory, in western and southern India.
For 2017-18, it reported revenue of ₹2,548.7 crore, against the ₹2,310 crore in the previous year.
Shankara’s profit rose to ₹73.8 crore from ₹58.8 crore during the same period.
So far this year, 22 companies have raised ₹13,188.39 crore through the QIP route, while in 2017, 43 companies had raised ₹56,152.08 crore, according to data from primary market tracker Prime Database.
Major QIP fundraises seen this year include telecom service provider Idea Cellular Ltd’s ₹3,500 fundraise in February, mortgage lender Housing Development Finance Corp. Ltd (HDFC)’s ₹1,894 crore fundraise in March and Oberoi Realty Ltd’s ₹1,200 crore fundraise in June.
Other companies that have raised funds through QIPs this year include Jindal Steel and Power Ltd, L&T Finance Holdings Ltd, JM Financial Ltd and NCC Ltd.
Source: Mint