Varun Beverages IPO subscribed 1.84 times on final day


Mumbai: Varun Beverages Ltd, the world’s second largest PepsiCo Inc. bottler, on Friday saw its initial public offering (IPO) subscribed 1.84 times, data from stock exchanges show.

As of 7 PM, on the final day of the offering, the category for institutional investors was subscribed 4.94 times, while the categories for high net-worth individuals and retail investors were subscribed 0.42 times and 0.79 times respectively, data from stock exchanges showed.

Varun Beverages launched its initial share sale on Wednesday. The company had priced its shares in the range of Rs440-445 per share.

At the upper end of the price band the company will raise a little over Rs1,100 crore.

“The institutional investor book has witnessed strong interest and was subscribed almost 5 times. The interest was largely driven by foreign investors with investors such as Nordea, APG and Capital Group investing in the institutional book. The book has been subscribed to by long only investors,” said V. Jayasankar, senior executive director and head (equity capital markets) at investment banking firm Kotak Mahindra Capital Co. Ltd.

Investment banks Kotak Mahindra Capital Co. Ltd, Axis Capital Ltd and CLSA India Pvt. Ltd and YES Securities (India) Ltd were managing the IPO.

Promoters Ravi Jaipuria and his son Varun Jaipuria sold 5 million shares each in the IPO, while the company sold 15 million new shares to raise primary capital to be invested in the company.

The company will use proceeds from the IPO to repay part of its Rs1,700 crore debt, taken on to fuel its expansion in the last few years. Rs600 crore of the debt is from PepsiCo and interest-free. However, the company still pays close to Rs110 crore in interest charges per annum on the remaining Rs1,100 crore, which will reduce by Rs70 crore following the IPO, Mint reported on 20 October.

Varun Beverages accounts for 45% of PepsiCo’s volumes in India. The company is the sole bottler and distributor for the North and East with the exception of Jammu and Kashmir, Odisha, Bihar and Jharkhand regions.

Between fiscal 2013 and June this year, the company invested Rs2,459.14 crore on expansion and modernization of its production capacities and increasing the penetration of its chilling equipment such as visi-coolers.

In 2015, the company expanded its operations by acquiring new sub-territories in the North, including four production facilities in Uttar Pradesh, Uttarakhand and Haryana. In 2016, it acquired two production facilities in Goa. It is also in the process of setting up a greenfield facility in Zimbabwe in anticipation of getting franchise rights for the region.varun-.jpg