IRFC, Indigo Paints IPOs to hit market this week, eye over Rs 5,800 cr

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Two companies -- Indian Railway Finance Corporation and Sequoia Capital-backed Indigo Paints -- are set to hit the market with their initial share-sale offers this week to raise an estimated over Rs 5,800 crore. The companies are expecting to benefit from an equity market, which is flush with liquidity and has seen a sharp increase in new retail investors.

The three-day initial share-sale of Indian Railway Finance Corporation (IRFC) would be open for public subscription during January 18-20, while the IPO of Indigo Paints would open on January 20 and conclude on January 22. IRFC IPO comprises up to 178.20 crore shares, comprising a fresh issue of up to 118.80 crore and offer-for-sale of up to 59.40 crore shares by the government.

The price band has been fixed in the range of Rs 25-26 per equity share and at the upper end of the price band, the IPO is expected to fetch Rs 4,633.4 crore. On Friday, the company raised Rs 1,390 crore from anchor investors.

IRFC, set up in 1986, is a dedicated financing arm of the Indian Railways for mobilising funds from domestic as well as overseas markets. Its primary objective is to meet the predominant portion of "extra budgetary resources" requirement of the Indian Railways through market borrowings at the most competitive rates and terms.

The Union Cabinet had in April 2017, approved listing of five railway companies. Four of them -- IRCON International Ltd, RITES Ltd, Rail Vikas Nigam Ltd and Indian Railway Catering and Tourism Corp -- have been listed.

Meanwhile, the IPO of Indigo Paints comprises fresh issuance of stocks aggregating to Rs 300 crore and an offer-for-sale of up to 58,40,000 equity shares by private equity firm Sequoia Capital, through its two funds -- SCI Investments IV and SCI Investments V -- and promoter Hemant Jalan.

The price band has been set at Rs 1,488-1,490 a share for its initial share-sale. The public issue would gather Rs 1,170.16 crore at the upper end of the price band.

Half of the issue is reserved for qualified institutional buyers, 35 per cent for retail investors, 15 per cent for non-institutional bidders and there is a reservation of up to 70,000 equity shares for subscription for employees, who will get a discount of Rs 148 per equity share to the offer price.

Proceeds from the fresh issuance of shares would be used for expansion of the existing manufacturing facility at Pudukkottai in Tamil Nadu, for purchasing of tinting machines and gyro shakers and repayment/prepayment of borrowings.

Kotak Mahindra Capital Company, Edelweiss Financial Services and ICICI Securities are the book running lead managers to the issue.

The Pune-based company manufactures a range of decorative paints and has an extensive distribution network across the country. As of September 30, 2020, the company has three manufacturing facilities located in Rajasthan, Kerala and Tamil Nadu.

In 2020, 15 main-board IPOs raised a little over Rs 26,600 crore, which was much higher than Rs 12,362 crore garnered by 16 companies in 2019.