Pune-based BVG India planning Rs1,000 crore IPO

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Mumbai: Pune-based facility management company BVG India Ltd plans to raise up to Rs1000 crore from an initial public offering (IPO), two people directly aware of the matter said.

The proposed offering is in the early stages of planning and BVG is in the process of hiring bankers for it, the persons cited above said on condition of anonymity.

“While it is certain that the IPO will be in the range of Rs1,000 crore, the other modalities are being worked out,” said the first person cited above. “The main reason for the IPO is to provide an exit to private equity fund 3i group, which currently owns 26% stake in the company,” the person added.

UK-based 3i Group Plc. had bought a 27% stake in BVG in 2011 from existing investor Kotak India Growth Fund I, a fund managed by the Kotak Private Equity Group. It also bought additional shares from the promoter family. Its total investment in the company was worth Rs200 crore.

Mint had reported in December 2015 that 3i was planning to exit BVG India through a secondary sale and had hired Kotak Mahindra Investment Bank to manage the sale which was expected to be in the $80-100 million range.

However, plans for the secondary sale were dropped and both the company and the PE fund decided to list it in the public market instead, the persons cited above said.

“Given the response that the recent IPOs of similar facility management companies such as Quess Corp and TeamLease Services have received, both BVG India and 3i felt that IPO is (the) best the option ahead,” the first person said.

“Apart from giving a complete exit to 3i, the company will also use part of the IPO proceeds to fund acquisitions,” the second person added.

In 2016, ICICI Ventures-backed staffing firm TeamLease Services Ltd and Fairfax Financial Holdings-funded business services provider Quess Corp Ltd successfully raised Rs420 crore and Rs400 crore from their respective IPOs.

An email sent to the 3i group was not answered until the time of going to press. BVG India chairman and managing director Hanmant Gaikwad could not be racehd for comment.

BVG is among India’s largest integrated services companies with its offerings spanning facility management, emergency services and turnkey projects. BVG was originally set up as a partnership between Gaikwad and Umeshrao Mane in 1997, with an eight-member cleaning crew. It has grown to become an integrated services company with an employee strength of more than 65,000.

During FY16, BVG reported total operating income of Rs1,370.73 crore and profit after tax of Rs117.03 crore, higher than Rs1,135.19 crore and Rs101.49 crore, respectively, a year earlier.

3i, which has assets under management worth £14 billion globally, has invested in Indian firms such as UFO Moviez Pvt. Ltd and Navayuga Engineering Co. Ltd through its private equity arm. The 3i India Infrastructure Fund, a $1.2 billion fund launched in 2008, has holdings in firms including Adani Power Ltd, GVK Energy Ltd, Ind-Barath Energy (Utkal) Ltd, KMC Constructions Ltd, Soma Enterprise Ltd and Supreme Infrastructure BOT Holdings Pvt. Ltd. In 2013, the 3i Group announced plans to cease investments in India, both private equity and infrastructure