Coffee Day nets Rs 1,150 cr from IPO, price fixed at Rs 328

The IPO, which closed after three days of bidding in Rs 316-328 price band, got oversubscribed 1.81 times

Set to debut in stock market, leading coffee chain operator Coffee Day Enterprises has fixed its public offer price at Rs 328 per share, taking the total proceeds to Rs 1,150 crore from its over-subscribed IPO.

The IPO closed on October 16 after three days of bidding in a price band of Rs 316-328 a piece for the shares on offer. The IPO got over-subscribed 1.81-times with demand worth Rs 2,000 crore.

Although the portion reserved for retail investors could not be fully subscribed with 90 per cent bids, the company has now fixed the final offer price at the upper end of the price band.

The shares reserved for qualified institutional buyers (QIBs) was subscribed nearly 4.4 times. The most tepid response was in non-institutional investors category, which saw only 53 per cent subscription.

In its final prospectus ahead of the listing, the company has now said the public issue of 3.5 crore shares has been made at a price of Rs 328 per equity share, aggregating Rs 1,150 crore.

This is the largest IPO in the Indian market in about three years since Bharti Infratel's over Rs 4,000 crore public offer in December 2012.

The issue comprises a net issue to the public of 3.46 crore shares and a reservation of 4.6 lakh shares aggregating Rs 15 crore for subscription by eligible employees.

The public issue would constitute 17.012 per cent of the company's post-issue equity share capital.

Coffee Day Enterprises Ltd is the parent company of 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. Its coffee retail chain operates under Cafe Coffee Day brand.

The company said that the issue price of Rs 328 has been determined in consultation with the investment bankers "on the basis of market demand from investors for equity Shares through the book building process and, is justified in view of the (various)... Qualitative and quantitative parameters".

Coffee Day, which competes with global giant Starbucks in the fast-growing Indian consumer market, also disclosed that the average cost of acquisition of equity shares by the company promoter is Rs 36.35 per share.

The public offer was being seen as heralding revival in big-ticket IPOs, but relatively tepid response from retail investors has raised concerns ahead of another big offer slated next week of low-cost carrier IndiGo's parent InterGlobe Aviation.

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

V G Siddhartha, the main promoter as well as Chairman and MD, holds 54.78 per cent stake in Coffee Day.

The overall shareholding of promoters was 92.74 per cent.

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