Pune-based paint manufacturing company, Indigo Paints, is planning to raise Rs. 1,000 crore through an initial public offering (IPO) by selling the shares of private equity firm Sequoia Capital India Advisors Private Limited. The company had filed preliminary papers with SEBI on Thursday.
The IPO comprises of fresh issue of equity shares aggregating to Rs. 3,00 crore and offer for sale of 5,840,000 equity shares. According to the draft red herring prospectus, private equity firm Sequoia Capital and the promoter Hemant Jalan are selling their shares. Indigo received two round investments from Sequoia Capital, SCI Investments IV, and SCI Investments V. In 2017, the company had acquired HI Build Coatings Private Limited, a wood coating, and decorative paint manufacturing company. The net proceeds from the offering would be used for expanding the existing manufacturing facility at Pudukottai, Tamil Nadu, for purchasing tinting machines and gyro-shakers, and towards repayment/prepayment of borrowings.
Book running lead managers to the issue are Kotak Mahindra Capital Company, Edelweiss Financial Services, and ICICI Securities. Link Intime India Private Limited is the registrar.
Indigo paints is the fifth-largest company in the decorative paint industry in India in terms of revenue as per the F&S report. In a highly competitive market, the company created its place by product differentiation strategy. Being the first company to manufacture and introduce some products, it has an early mover advantage. Indigo Differentiated Products represented 28.62% of total revenue from operations in Fiscal 202. The company is focused on brand recognition and signed cricketer M S Dhoni as brand ambassador in June 2018. Along with product differentiation strategy and brand recognition, the company needs to build and expand a strong distribution network to compete with other players in the market. Despite its increased expenditure in marketing, the company is profitable in the last three fiscal years.
The company has an extensive distribution network of over 27 states and seven union territories. The company has three strategically located manufacturing facilities based out of Jodhpur, Rajasthan, and Kochi in Kerala and Pudukkottai in Tamil Nadu. The company is involved in the manufacturing and sales of decorative paints, including emulsions, enamels, wood coatings, distempers, primers, putties, and cement.
