Shrimp exporter Nekkanti Sea Foods Ltd (NSFL) has bought back shares issued in a fundraising round before its planned initial public offering (IPO) as the company has failed to go public so far, said three people aware of the development, requesting anonymity.
Visakhapatnam-based Nekkanti processes and exports frozen shrimp products. It has been operating for over three decades.
In July, Mint had reported that Nekkanti had raised around ₹205 crore from a clutch of influential markets investors such as Motilal Oswal, White Oak Capital, New Horizon Investments and Madhusudan Kela.
White Oak Capital is an alternative asset manager founded by Prashant Khemka, the former chief investment officer for Goldman Sachs Global Emerging Markets fund and India fund.
New Horizon Investments is managed by Madhav Bhatkuly.
Kela, the former chief investment strategist of Reliance Capital, is a renowned investor in Indian stock markets.
Motilal Oswal’s investment banking arm was the sole banker managing the initial share sale of Nekkanti.
“Nekkanti had raised funds from these leading investors in the period of April-May in a pre-initial public offering round. The funding was largely primary investment for the company to use for working capital and other requirements.
The understanding was that the company will go public within six months from the time of the pre-IPO round,” said the first person cited above.
However, he added, that given the difficult times in the primary markets over the last few months, several small- and mid-cap companies, such as Nekkanti, have struggled to find takers for their share sale, resulting in several of them to put off or delay their public listing plans.
“Having failed to go public, the company has recently bought back the pre-IPO shares from the investors, giving them an exit, which would have otherwise come after the company had gone public,” he said.
In the pre-IPO round, New Horizon Investments had invested around ₹100 crore, while funds of Motilal Oswal had invested ₹70 crore. The rest came from Khemka and Kela, Mint had reported.
According to the second person cited above, the company has bought back the shares at which they were issued six months ago.
“The pre-IPO shares represented a 4-5% stake in the company. The shares were issued at ₹533 per share and were bought back at the same price.” Nekkanti is a cash-rich company and it has bought the shares from the cash on their books, he added.
Emails sent on Friday to Nekkanti Sea Foods, Motilal Oswal, New Investment Horizon, White Oak Capital and Madhusudan Kela did not elicit any response.
The company had filed its draft prospectus with the Securities and Exchange Board of India (Sebi) in March to raise ₹750 crore, including a fresh capital raise of ₹250 crore.
According to the company’s draft prospectus, Nekkanti has three processing facilities along the coast of Andhra Pradesh. The company is also in the process of commissioning a processing unit in Nellore this year.
Nekkanti caters to customers in the packaged food industry, food service companies and distributors, catering to the retail segment, with a focus on exports to the US and Europe.
In 2016-17, it had a 2.49% share by volumes in the Indian shrimp industry, and a value share of 3.31% of the total exports, according to a report by rating agency Crisil.
In FY17, the company posted revenue of ₹830.2 crore, up from ₹774.1 crore in the previous fiscal, while its profit was at ₹55.1 crore, against ₹29.6 crore in the previous fiscal, according to its draft prospectus.
Source: Mint