Coffee Day plans biggest IPO in 3 years to net Rs1,150 cr

07 Oct 2015

Coffee Day Enterprises Ltd, the company behind Cafe Coffee Day = India's biggest coffee chain - will launch an initial public offering next week, aiming to raise up to Rs1,150 crore in the country's biggest IPO in nearly three years.

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.

Coffee Day, which competes with Starbucks Corp among others in India, is backed by private equity firm KKR & Co. It will launch its share sale on 14 October.

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.

 The company, which is selling new shares in the IPO, will dilute as much as 17.55 per cent on a post-issue basis to raise up to Rs1,150 crore, according to a presentation made at a company news conference on Wednesday.

 The company will sell Rs340 crore worth of shares to cornerstone investors ahead of the IPO, managers to the IPO said. It is selling shares in a price range of Rs316 to Rs328 in the issue that will open on October 14 and close on October 16.

 Coffee Day Enterprises, which counts private equity KKR and New Silk Route among its investors, runs the Cafe Coffee Day cafes with more than 1,500 stores in India and 14 overseas.

 It also owns about 16 per cent of software services exporter MindTree Ltd and about 53 per cent in Sical Logistics Ltd.

Cafe Coffee Day competes with Starbucks Corp, Whitbread Plc's Costa Coffee, and Barista, among others, in a primarily tea-drinking country that has in recent years seen a surge in coffee consumption.