FabIndia IPO: India’s leading ethnic wear brand FabIndia is likely to float its initial public offering (IPO) soon with the Securities and Exchange Board of India (Sebi) approving the company’s Draft Red Herring Prospectus (DHRP) on Monday. The FabIndia IPO will consist of both a fresh issue and an Offer For Sale (OFS) by selling shareholders. The FabIndia IPO will come at a time when the initial share sale of the LIC will be done, and markets would be expected to be accepting of such offers like last year.
FabIndia had filed its DHRP with the Sebi on January 24 this year. The regulating agency on Monday said in an update that it had cleared the IPO for FabIndia. As per the DHRP, the FabIndia IPO will comprise of a fresh issue of over Rs 500 crore, and an OFS of of 2.5 crore equity shares by promoters and investors, including Bimla Nanda Bissell, William Nanda Bissell, Monsoon Latane Bissell, Madhukar Khera and JLBPartners Holding Inc. The company will also see a stake sale by Premji Invest, which is headed by marquee investor Azim Premji.
Through the Offer for Sale, investors PI Opportunities Fund I, and Prazim Trading and Investment Company will offload more than 1.47 crore lakh equity shares along with the promoters. The company in its filing also noted that it may raise Rs 100 crore through its pre-IPO placement and the IPO size may get reduced accordingly.
FabIndia IPO promoters have also notified the company’s plans to donate seven lakh shares to farmers and artisans. “Our promoters, namely, Bimla Nanda Bissell and Madhukar Khera have opened their respective demat accounts and have transferred 400,000 equity shares and 375,080 equity shares, respectively, that are proposed to be transferred by way of gift to the artisans and farmers,” it said.
According to a report by the Economic Times, quoting sources, the FabIndia IPO is likely to be around worth Rs 4,000 crore in total.
As per the DHRP, the fresh proceeds of Rs 500 crore garnered from the FabIndia IPO will be used for various purposes. Among this, Rs 250 crore will be used for voluntary redemption of the NCDs issued by the company, and Rs 125 crore will be utilised for prepayment or scheduled repayment of a portion of certain outstanding borrowings. The remaining amount will be used for general corporate purposes.
FabIndia Limited, established in 1960, is consumer lifestyle platform with an established legacy focused on authentic, sustainable and Indian traditional lifestyle products. Its brands — ‘Fabindia’ and ‘Organic India’ — are among the most recognised brands in the country. “Our business model is focused on sustainability by design and we have sought to createa differentiated supply-side community with our model of engaging a network of vendors (which in turn engage artisans)and farmers across India,” the company says in its DHRP.