India's PE-backed Varun Beverages files for IPO
Varun Beverages, a major drinks manufacturer and bottler for PepsiCo in South Asia backed by several PE investors, has filed for an IPO.
The offer will see up to 25 million shares made available, including 15 million freshly issued shares and 10 million held by its promoters, the Jaipuria family. Pricing for the shares was not announced in the company's prospectus; Livemint, citing a person familiar with the situation, said the company is looking to raise at least INR10 billion ($147 million).
Varun has received considerable support from PE investors; Standard Chartered Private Equity committed INR2.5 billion in 2011 and another INR1.7 billion the following year, while the International Finance Corporation invested $85 million in 2014 and Aion Capital committed INR6 billion last year. None of the company's PE backers will exit in the offering.
Varun plans to use the proceeds from the offer mainly to reduce its debt, with INR5.4 billion allotted to prepayment or scheduled repayment of the company's loans. The rest will be used for general corporate purposes.
Founded in 1995, Varun is the largest bottler of PepsiCo products in South Asia, and the second largest worldwide. The company's largest source of revenue is India, which contributed 84% of revenues last year. Varun has also been granted the franchise for various Pepsi products in Nepal, Sri Lanka, Morocco, Mozambique and Zambia, and is currently constructing a new facility in Zimbabwe where it anticipates being awarded franchise rights.
Varun is the flagship enterprise of founder Ravi Jaipuria's RJ Corp Group, whose business interests include beverages, fast food restaurants, dairy products, breweries, education, healthcare and hospitality. At the moment the parent holds a third of the company.
Currently Varun operates 16 production facilities in India and five in its international territories; it claims an annual production capacity of 3.4 billion liters in India and 990 million liters overseas. The company reported revenue of INR34 billion for the year ended December 2015, up from INR25 billion the previous year; profits over the same period rose from INR37 million to INR1.6 billion.
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