Coffee Day IPO gets lukewarm response from HNIs and retail investors

IPO completed successfully on 16 October 2015

The Rs 1150-crore initial public offer (IPO) of Coffee Day Enterprises (CDEL) was oversubscribed on the back of strong response to the issue from institutional investors. However, the IPO received lukewarm response from high networth individuals (HNIs) and retail investors. CDEL is the parent company of the Coffee Day Group which houses the coffee selling restaurants CafCoffee Day. The non-institutional investors (NII) category which comprises of high networth individuals and the corporate sector got bids for a little over half the number of shares reserved for this segment of investors. The retail investors' portion was subscribed to the extent of 90% of the quantum of shares reserved for this section of investors. The IPO was successfully completed on 16 October 2015.

It may be recalled that CDEL had finalized allotment of about 1.03 crore shares to anchor investors at Rs 322 per share, the mid-point of the Rs 316 to Rs 328 per share IPO price band, just a day before the opening of the IPO. In value terms, the commitment from anchor investors aggregated Rs 334.27 crore.

In addition to the coffee business, CDEL operates other select businesses namely, development of IT- ITES technology parks, logistics, financial services and hospitality.

The company intends to utilize the proceeds of the IPO for setting-up of new CafNetwork outlets and Coffee Day Xpress kiosks, refurbishment of existing CafNetwork outlets and vending machines, increase coffee roasting capacity and setting-up of a new coffee roasting plant. The company also intends to set up a new manufacturing facility for producing instant coffee to capture the growing demand for instant coffee in India. A substantial portion of the IPO proceeds will be used for repayment of loans. The company intends to repay loan amounting to Rs 632.80 crore from the proceeds of the IPO.

On consolidated basis, CDEL reported net loss of Rs 20.05 crore on net sales of Rs 623.06 crore in Q1 June 2015. The company reported a net loss of Rs 87.24 crore on net sales of Rs 2479.36 crore for the year ended 31 March 2015 (FY 2015).

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