The World Bank Group entity International Finance Corporation (IFC) has picked up 4.55% stake in global private equity firm TPG-backed Dodla Dairy, the third-largest private dairy firm in South India, by investing over 100 crore.
This comes nearly two years after IFC invested around $16 million ( 106 crore) in debt in the Hyderabad-based firm, which is now preparing to tap the public markets, which will enable TPG to exit partially. A person aware of the development told ET, “IFC subscribed to 26.52 lakh shares of Dodla Dairy at a price of 377 a share, involving an amount of little over 100 crore, translating into 4.55% equity stake.”
Further, the person, who did not want to be named, said, “IFC was offered a stake through pre-IPO private placement route and Dodla Dairy obtained the approvals of its board and of shareholders at an extraordinary general meeting a few weeks ago.”
The dairy firm in FY19 issued 5.5 lakh redeemable non-convertible debentures of 1,000 each in favour of IFC, wherein the debentures will mature by 2026-27. Dodla Dairy, which is preparing to tap the public markets with an IPO shortly to raise around 150 crore through a fresh issue of equity shares, will now be confined to raise around 50 crore from the public. TPG, which currently holds 26% in the firm, will sell 12-15% to raise around 300-350 crore. “The bankers have fixed a threshold limit of around 550 crore through fresh equity and sale by existing equity holders. The promoters led by Dodla Sunil Reddy will divest their stake accordingly to make up the balance amount,” said the same person quoted above.
In all, around 150 crore has to come into the company, of which around 100 crore has already come in through a private placement with IFC. The company will end up with around 310 crore of consolidated reserves after the closure of the current fiscal, including the IPO proceeds.
Dodla Dairy, which earned 2,139 crore in revenues last year, is looking to deploy the proceeds towards repaying or prepaying certain borrowings, funding capital expenditure needs, general corporate purposes and other growth opportunities.
