Supermart major Vishal Mega Mart makes confidential filing for $1bn-IPO

Partners Group, Kedaara Capital-backed retailer becomes the fourth company to take this route

Vishal Mega Mart (VMM) has taken the confidential filing route to submit its draft offer document with market regulator Securities and Exchange Board of India (Sebi).

Investment banking sources confirmed this development and said the fashion retailer’s initial public offering (IPO) is aiming to mobilise as much as $1 billion.

With this, VMM becomes the fourth company to opt for the confidential filing route. Tata Play was the first company to tap this route, first introduced in 2022. It, however, scrapped its IPO plan. Last year, Softbank-backed hotel aggregator Oyo also made a confidential filing for its IPO. Meanwhile, in April, delivery giant Swiggy took the pre-filing route for its IPO, whose size is pegged at $1.25 billion.

VMM is fully owned by private equity (PE) players. In 2014, Partners Group and Kedaara Capital had completed the acquisition of the fashion-focused retailer from TPG Capital and the Shriram Group.

VMM’s IPO will see Switzerland’s Partners and homegrown Kedaara pare their holdings.

Kotak Mahindra Capital, Jefferies, JP Morgan, ICICI Securities and Morgan Stanley are the investment banks handling the VMM share sale.

An email sent to VMM remained unanswered till the time of going to press.

VMM is popular in Tier-II and Tier-III cities where consumers tend to be more value conscious. Although the company operates over 600 stores, it also has an omni-channel presence.

The company operates in the value fashion retail space, competing with Reliance group’s Trends, Tata Group’s Zudio and Avenue Supermarts’ Dmart.

Introduced in 2022, the confidential filing route allows companies to keep their draft red herring prospectus (DRHP) private until they firm up their listing plans. This helps issuers withhold sensitive information from entering the public domain. It also helps avoid unwarranted public scrutiny and opportunistic litigations.

Still, most companies opt for the traditional route for filing their DRHPs with Sebi. Investment bankers said this route is more cost and time-effective.

Once Sebi issues its observation on the confidentially filed offer document, companies have to make it public. The updated DRHP has to be placed in public domain for at least 21 days. During this period, the public is allowed to provide any feedback on the offer document. Once this period is over, the company can proceed with its IPO.

Companies opting for the confidential filing route are allowed to undertake limited marketing to institutional investors to gauge demand and arrive at fair pricing.  Sebi’s observations are valid for 18 months for confidentially-filed IPOs as opposed to 12 months for those taking the traditional route. A company has to launch their offering during this period or the observations lapse, which warrants a re-filing of offer document.

What is confidential filing

Introduced in 2022, the confidential filing route allows companies to keep their draft red herring prospectus (DRHP) private until they firm up their listing plans. This helps issuers withhold sensitive information from entering the public domain. It also helps avoid unwarranted public scrutiny and opportunistic litigations.