S Chand and Company, a publisher of school text books for more than seven decades, is going public with an initial public offering of close to Rs 728 crore.
The IPO comprises a fresh issue of shares worth Rs 325 crore, which will go to the company, while there is an offer for sale (OFS) of around 60 lakh shares from existing shareholders. The company will not receive any proceeds from the OFS.
The company has set a price band of Rs 660-670 a share for the IPO, which will open on April 26 and close on April 28.
The promoters are selling up to 9,54,907 equity shares in the OFS, while private equity firm Everstone Capital Partners will also be offloading around 48 lakh shares. Other shareholders will sell around 253,953 equity shares through the OFS.
Post the IPO, the shareholding of Everstone is expected to come down to around 16 per cent from around the current 32 per cent. Promoters will hold around 47-48 per cent.
Everstone had invested Rs 200 crore in S Chand in 2012 and further invested Rs 60 crore in a second round of funding in 2015, which also saw International Finance Corp pour in around Rs 110 crore.
S Chand operates across three segments—K12 (school text book publishing), higher education (college books and test materials for various entrance exams) and early learning. However, the K12 segment contributes to around three-fourth of the company's revenue.
The publisher has made three acquisitions in recent years, namely, Chhaya Prakashani, New Saraswati House and Vikas Publishing House. The company will utilise much of the proceeds from the fresh issue to repay loans it had raised for the acquisitions.
“Our debt in FY2017 would have been in the range of Rs 300 crore plus. We plan to repap approximately Rs 255 crore of debt, while rest of the proceeds (from the fresh issue) will be used for general corporate purposes and IPO costs,” Himanshu Gupta, managing director at S Chand Group, told THE WEEK.
The company will continue to focus on expanding the K12 business further, while it is also open to opportunities in the higher education segment.
“Today, more people want to put their children in private schools. And, as the school business is increasing, we will make more investments in that space rather than going into any other space. But if there are good opportunities in the higher education space, we are open to that also,” he clarified.
For the financial year ended March 31, 2016, S Chand reported a revenue of Rs 541 crore on a profit of Rs 47 crore. The company said around 75 per cent of its annual revenue is generated in the January-March quarter, given that the new school year for most CBSE schools opens from April.
S Chand has also invested around Rs 33 crore to pick minority stakes in five start-ups in the education segment and it aims to continue investing in early stage companies to grow its digital platform.
This will be the sixth mainboard IPO to hit the capital markets so far in 2017. Five companies had gone public between January and March and raised Rs 4,185.91 crore. The biggest IPO so far this year has been that of Avenue Supermarts, the operator of D-Mart supermarket chain, which raised Rs 1,870 crore, followed by the BSE, which raised Rs 1,243 crore in January.
Of the five IPOs this year, four IPOs have given stellar returns.
According to primary market tracker Prime Database, 13 companies are holding SEBI approval to raise more than Rs 9,200 crore, while ten companies looking to raise a total of Rs 16,700 crore are awaiting regulatory approval.
