Coffee Day to hit market on Oct 14 with Rs 1,150 crore IPO

Mumbai: In the biggest IPO in nearly 3 years, India's top coffee chain operator Coffee Day Enterprises with hit the market on October 14 to raise an estimated Rs 1,150 crore as it eyes a valuation of over Rs 6,500 crore (nearly USD one billion).

The company, which operates under Cafe Coffee Day (CCD) brand and competes with global giant Starbucks in the fast- growing Indian consumer market, today fixed a price band of Rs 316-328 per share for its Initial Public Offer.

Besides being the biggest in nearly three years, it is also being seen as heralding the long-awaited revival in the IPO market as it could be followed by a number of big brands such as Infibeam -- the first e-commerce firm to launch an IPO in India -- and InterGlobe Aviation Ltd that operates the country's most successful airline under IndiGo brand.

A number of small IPOs have hit the markets successfully in recent months, but the market has not witnessed any big public issue for a long time. In 2014, six IPOs had hit the market, but the total amount garnered was just Rs 1,528 crore.

The Coffee day Enterprises IPO would open on October 14 and close on October 16, wherein it would sell shares to the public while a portion would be reserved for employees.

Kotak Investment Banking, Citigroup, Morgan Stanley, Axis Capital, Edelweiss and YES Bank are handling the IPO of Coffee Day Enterprises, whose shareholders include private equity giants KKR and New Silk Route.

It has more than 1,500 stores in India and 14 overseas.

"Of the money raised, Rs 635 crore will go into reducing the debt in the holding company, while we have committed to our investors, Rs 290 crore over the next 18 months will go towards expansion of coffee business. The surplus of Rs 125 crore will also go towards the coffee business," V G Siddhartha, chairman of Coffee Day Enterprises said here.

"We will open 135 new stores every year," he added.

Siddhartha, who is the main promoter as well as chairman and managing director, holds 54.78 percent stake in the company while all promoters together have 92.74 per cent holding in the company.

In March, Coffee Day raised Rs 100 crore in a pre-IPO funding from Nandan Nilekani and Rare Enterprises (owned by Rakesh Jhunujunwala and Ramesh Damani) among others.

In addition to having the largest chain of cafes in India, it operates a fully-integrated coffee business ranging from procuring, processing and roasting of coffee beans to retailing of coffee products across various formats.

Coffee Day Enterprises is the parent company of the Coffee Day Group and operates coffee business through a subsidiary, Coffee Day Global Ltd (earlier known as Amalgamated Bean Coffee Trading Company Limited) and its subsidiaries.

Coffee Day Global Ltd had a total income of Rs 1,154 crore and operating profit of Rs 189 crore in fiscal 2013-14.

In addition to having the largest chain of cafes in India, it operates a vertically integrated coffee business which ranges from procuring, processing and roasting of coffee beans to retailing of coffee products across various formats.