Auto component major, Samvardhana Motherson Finance Ltd (SMFL), plans to raise Rs 1,665 crore through an initial public offering (IPO).
The IPO opens for subscription on May 2 and closes on May 4, and includes a fresh issue of Rs 1,344 crore and a sale offer of Rs 321 crore by shareholder, Radha Rani Holdings.
SMFL, a principal holding company of the Samvardhana Motherson Group, has set a price band of Rs 113-118 a share (face value of Rs 10). The issue is being managed by Standard Chartered Securities and JP Morgan.
Creating headroom
Mr Vivek Chaand Sehgal, Chairman of the Group, said that part of the fresh funds would be used to retire the Rs 627 crore debt raised for acquisition of 80 per cent stake in European plastic parts maker, Peguform Group, last year.
“This will create headroom for future acquisition opportunities. Also, some of our Group firms need fresh capital for growth,” he said.
This is the second Group firm to list after a gap of 19 years — another holding firm and a joint venture with Sumitomo, Japan, Motherson Sumi Systems Ltd (MSSL) was listed in 1993. Share prices for MSSL were down 1.54 per cent to Rs 178.90 on the BSE on Friday.
Wide Presence
Mr Sehgal said the company was looking to enter the Russian auto supplier market. “Only Russia is missing for us in the BRIC nations. It's just around the corner, but the laws are difficult for us to understand. We're looking at all options, including a joint venture and acquisition,” he said.
With 77 per cent of the company's revenues coming from abroad, the Group is present across 25 countries and supplies a variety of products such as electrical systems, air-conditioning and lighting systems to the automotive sector.
SMFL expects margins to be under pressure in the current fiscal, following the recent spate of acquisitions. Apart from Peguform, Motherson Sumi bought out European auto rear-view mirror maker in 2009 (renaming it Samvardhana Motherson Refletec). It also acquired a majority interest in Sintermetal SA.
While the Volkswagen Group is one of the largest customers for the Group, it also supplies to BMW, Daimler, Renault-Nissan, Ford, Volvo Cars, Suzuki, Tata Motors, Honda, Toyota and Fiat. Non-auto clients include Schneider Electric, GE and Caterpillar.