FOR INVESTORS, BENGALURU IS THROWING UP OPPORTUNITIES IN FOOD AND BEVERAGES, RETAIL AND CONSUMER SERVICES SECTORS.
In the next few months, a slew of non-IT companies in Bengaluru will go public. Cancer-care specialist HealthCare Global Enterprises Ltd (HCG) is planning an initial public offering to raise capital for its expansion. Other IPOs in the pipeline are from human resource consultancy firm TeamLease, retail chain Cafe Coffee Day and Syngene, the research arm of biotech major Biocon.
It is not the first time that Bengaluru-based non-tech companies are hitting the capital markets. Titan, Britannia and Page Industries, and real estate firms such as Sobha Limited, Prestige Group and Brigade Group have all gone for IPOs in the past. “Many Bengaluru-based, non-IT companies have gone for IPOs. The city has a strong flavour of consumer-oriented companies. Companies that want to go for an IPO now have reached a maturity level where they can exit private equity investments. We can expect around eight to 10 IPO filings from non-IT companies in the city,” said Sunil Jain, partner, Sprout Capital Advisors.
Though they are aiming big by going for IPOs, many companies are not ready to reveal much about what exactly they want to achieve by going public. “What we are trying to achieve here is not only to become global leaders in the health care industry, but increase our potential as well. With help from the government, I believe that there is an opportunity for a very healthy growth and for making Bengaluru the centre of excellence,” said Dr B.S. Ajaikumar, chairman, HCG. The company, which has been looking to launch an IPO for some time, is reportedly finalising bankers to initiate the process. By going public, it is planning to raise at least Rs400 crore.
The Amalgamated Coffee Bean Trading Company, owner of Cafe Coffee Day, is seeking to raise nearly 01,500 crore by selling 20 to 25 per cent stake in the retail chain through a public offer that values the 18-year-old company at about $1 billion. The group has reportedly been working with banks and audit firms over the last few months to prepare for its IPO.
Biocon Ltd is looking to offload up to 15 per cent stake in Syngene, shares of which private equity firm India Value Fund Advisors recently picked up. Biocon may be looking to raise at least Rs570 crore through the IPO, which is expected to happen later this year. TeamLease, which is partly owned by ICICI Venture, has hired Credit Suisse, IDFC Ltd and ICICI Securities to manage its IPO, which is expected to raise at least Rs770 crore
“I feel that the Bengaluru market will be dominated by mid-sized IPOs, mainly in the range of Rs600 to Rs800 crore. I do not see big mandates happening from the Bengaluru market. Ever since the IPOs of many real estate firms were oversubscribed two to three times, Bengaluru has not seen any big non-tech IPO mandates. Though there are scores of non-IT companies in the city, Bengaluru is still known as a technology hotspot,” said B. Gopkumar, head of broking at Kotak Securities.
Recently, Bengaluru-based real estate firm Value and Budget Housing Corp, backed by Mphasis founder Jaithirth Rao, revealed plans to raise about Rs500 crore through an IPO. It is planning to raise capital to facilitate the exit of some of its investors. The firm is reportedly being funded by private equity funds such as the Carlyle Group LP and International Finance Corporation.
According to VCCircle, a leading business information website, Bengaluru's famed entrepreneurial spirit, which is closely identified with technology, is getting redefined. For investors, the city's unique lifestyle quotient is throwing up opportunities in food and beverages, retail and consumer services sectors. Thanks to an educated migrant community, new ventures in health care, education, leisure and real estate sectors are mushrooming. The forum also says that many IT entrepreneurs are pumping capital into new domains such as social entrepreneurship, which, in turn, is boosting non-IT business in the city.