Indigo Paints Limited to open its Initial Public Offer on January 20, 2021Price Band of Rs. 1,488-1,490 per Equity Share

January 14, 2021 chennaiviews

Price Band ofRs.1,488 – Rs.1,490 per equity share offace value of Rs. 10 each (“Equity Share”)A discount of Rs. 148 per Equity Share is being offered to Eligible Employees bidding in the Employee Reservation Portion
Bid/Offer Opening Date – Wednesday, January 20, 2021 and Bid/Offer Closing Date – Friday, January 22, 2021
Minimum Bid Lot is 10 Equity Shares and in multiples of 10 Equity Shares thereafter
The Floor Price is 148.8 times the Face Value of the Equity Shares and the Cap Price is 149.0 times the Face Value of the Equity Shares

Pune based, Indigo Paints Limited (the “Company”), one of the fastest growing amongst the top five paint companies in India and fifth largest company in the Indian decorative paint industry in Indiain terms of its revenue from operations for FY20 (Source: F&S Report), will open the Bid/Offer period in relation to its initial public offeringof Equity Shares (the “Offer”/ “IPO”) on Wednesday, January 20, 2021.The Bid/Offer period will close on Friday, January 22, 2021.The price band of the Offer has been fixed at Rs. 1,488 – Rs. 1,490 per Equity Share. The Company may, in consultation with the Book Running Lead Managers (the “BRLMs”), consider participation by Anchor Investors which shall be one Working Day prior to the Bid/Offer Opening Date.

The IPO comprises a fresh issuance of Equity Shares aggregating to Rs. 3,000 million by the Company (“Fresh Issue”) and an offer for sale of up to 5,840,000 Equity Shares by Sequoia Capital India Investments IV and SCI Investments V (the “Investor Selling Shareholders”), and the promoter selling shareholder, Hemant Jalan (the “Promoter Selling Shareholder” and together with the Investor Selling Shareholders, the “Selling Shareholders” and such offering of Equity Shares by the Selling Shareholders, the “Offer for Sale”). The Offer includes a reservation of up to 70,000 Equity Shares for subscription by Eligible Employees of the Company (the “Employee Reservation Portion”). The Company and the Selling Shareholders in consultation with the BRLMs, are offering a discount of Rs. 148 per Equity Shareto the Offer Price to Eligible Employees bidding in the Employee Reservation Portion.

The Offer less the Employee Reservation Portion is referred to as the “Net Offer”. The Offer is being made through book building process in accordance with Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957 and Regulation 31 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (the “SEBI ICDR Regulations”) and in compliance with Regulation 6(1) of the SEBI ICDR Regulations, wherein not more than 50% of the Net Offer shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”, the “QIB Portion”), provided that the Company may, in consultation with the BRLMs, allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations (“Anchor Investor Portion”), of which one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Allocation Price. In the event of under-subscription, or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. Further, 5% of the Net QIB Portion shall be available for allocation on a proportionate basis only to Mutual Funds, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs.

Further, not less than 15% of the Net Offer shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. Further, Equity Shares will be allocated on a proportionate basis to Eligible Employees applying under the Employee Reservation Portion, subject to valid Bids received from them at or above the Offer Price. All potential Bidders (except Anchor Investors) are required to mandatorily utilise the Application Supported by Blocked Amount (“ASBA”) process providing details of their respective ASBA accounts, and UPI ID in case of RIBs using the UPI Mechanism, if applicable, in which the corresponding Bid Amounts will be blocked by the SCSBs or by the Sponsor Bank under the UPI Mechanism, as the case may be, to the extent of respective Bid Amounts. Anchor Investors are not permitted to participate in the Offer through the ASBA process.

The Company proposes to utilise the Net Proceeds as follows (i) INR 1,500 mn towards funding capital expenditure for expansion of its existing manufacturing facility at Pudukkottai, Tamil Nadu by setting-up an additional unit adjacent to the existing facility; (ii) INR 500 mn towards purchase of tinting machines and gyroshakers;(ii) INR 250 mn towards repayment/prepayment of all or certain of Company’s borrowings; and (iv) balance towards general corporate purposes.

The Equity Shares offered in this Offer are proposed to be listed at both BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”, together with BSE, the “Stock Exchanges”) post the listing. For the purpose of the Offer, BSE is the Designated Stock Exchange.

Kotak Mahindra Capital Company Limited, Edelweiss Financial Services Limited and ICICI Securities Limited are the BRLMs to the Offer.

All capitalized terms used herein and not specifically defined shall have the same meaning as ascribed to them in the Red Herring Prospectus dated January 11, 2021 (“RHP”).

Disclaimer: INDIGO PAINTS LIMITED is proposing, subject to receipt of requisite approvals, market conditions and other considerations, to make an initial public offer of its Equity Shares and has filed the RHP with the RoC and thereafter with SEBI and the Stock Exchanges. The RHP is available on the website of Securities and Exchange Board of India at www.sebi.gov.in, on the websites of the Stock Exchanges at www.bseindia.com and www.nseindia.com as well as on the websites of the BRLMs, Kotak Mahindra Capital Company Limited at www.investmentbank.kotak.com, Edelweiss Financial Services Limited at www.edelweissfin.com and ICICI Securities Limited at www.icicisecurities.com, respectively. Investors should note that investment in equity shares involves a high degree of risk and for details relating to such risk, see “Risk Factors” beginning on page 23 of the RHP. Potential investors should not rely on the draft red herring prospectus dated November 11, 2020 for any investment decision. The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act“) or any other applicable law of the United States and, unless so registered, may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable U.S. state securities laws. Accordingly, the Equity Shares are being offered and sold (i) within the United States only to persons reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A and referred to in the RHP as “U.S. QIBs” (for the avoidance of doubt, the term “U.S. QIBs” does not refer to a category of institutional investor defined under applicable Indian regulations and referred to in the RHP as “QIBs”)) in transactions exempt from, or not subject to, the registration requirements of the Securities Act, and (ii) outside the United States in offshore transactions in reliance on Regulation S and pursuant to the applicable laws of the jurisdictions where those offers and sales are made