The current surge in initial public offering (IPO) activity is far from over as three more companies -- Muthoot Microfin, Flair Writing Industries, and Happy Forgings -- have received capital market regulator SEBI's approval to list their shares on domestic bourses. Adding to it, the primary market is also packed with ongoing issues, with IPOs of some big players such as Cello World and Mamaearth’s parent Honasa Consumer opening this week to raise ₹3,601 crore of funds.
Pen maker Flair Writing Industries, which filed papers with the SEBI in July this year, received a green signal from the regulator on October 23. Microfinance institution Muthoot Microfin and Punjab-based Happy Forgings, which filed their respective preliminary IPO papers with the SEBI in June and August this year, obtained the regulator's observation letters on October 27.
Flair Writing Industries
Flair Writing Industries, a writing instruments manufacturing company, gets SEBI nod to raise ₹745 crore through the IPO route. The offer comprises a fresh issue of equity shares worth ₹365 crore and an offer-for-sale (OFS) of equity shares worth up to ₹380 crore by promoters and promoter group entities, according to the draft red herring prospectus (DRHP) filed in July, 2023.
Owner of over 45 year old flagship brand “Flair”, the homegrown company proposes to utilise the net proceeds of the fresh issue for setting up a new manufacturing facility for writing instruments in Valsad district in Gujarat at an estimated amount of ₹95.62 crore. The firm intends to use part of the capital for funding capital expenditure as well as for loan repayment of the company and its subsidiaries, Flair Writing Equipments (FWEPL) and Flair Cyrosil Industries (FCIPL). The balance amount will be used to meet general corporate purposes.
According to a CRISIL report, the company is the largest player in the pens segment with a revenue of ₹754.18 crore in financial year 2023 from the pens writing instruments business in India. It holds a market share of approximately 9% in India's overall writing and creative instruments industry, as of March 31, 2023.
The company is among the top three players in the overall writing instruments industry with revenue of ₹915.55 crore in the financial year 2023. It is also among the top two organised players which have seen faster growth in revenue as compared to the overall writing and creative instrument industry growth rate. The industry grew at a CAGR of 5.5% between the financial year 2017 and 2023, it grew at a CAGR of approximately 14% during the same period.
Muthoot Microfin
Muthoot Microfin, a microfinance institution providing micro-loans to women customers with a focus on rural regions of India, has also received go ahead from the SEBI to launch an IPO. It had filed draft papers with the market regulator in early July to raise up to ₹1,350 crore through public listing of shares. The IPO will consist of a fresh issue of equity shares worth ₹950 crore and an OFS of ₹400 crore by selling shareholders.
This is the second attempt by the microfinance arm of Muthoot Pappachan Group to raise funds via IPO route. In early 2018, the company filed for an IPO and also received approval for the same, but it did not go ahead due to adverse market conditions.
The company intends to use IPO proceeds from the fresh issues to strengthen its capital base to meet future capital needs.
Muthoot Microfin is the fourth largest NBFC-MFI in India in terms of gross loan portfolio as of December 31, 2022, as per CRISIL report. It is the third largest amongst NBFC-MFIs in South India in terms of gross loan portfolio, the largest in Kerala in terms of MFI market share, and a key player in Tamil Nadu with an almost 16% market share, as of December 31, 2022, the report noted.
Happy Forgings
Auto components maker Happy Forgings, which filed its DRHP with the SEBI in August this year, has received approval to raise capital via IPO route. The IPO of Punjab-based company consists of a fresh issue of ₹500 crore worth of shares and an OFS of 80.55 lakh equity shares by promoter and investor. Paritosh Kumar Garg (HUF) and India Business Excellence Fund – III will offload 53.7 lakh shares and 26.85 lakh shares respectively, via OFS.
The company, claimed to be the fourth largest manufacturer of heavy forged and high precision machined components in India, plans to use net fresh proceeds primarily for purchase of equipment, plant and machinery at a cost of ₹213.6 crore. The company will use ₹190 crore to repay its debt and the remaining funds to meet general corporate purposes.
