CIEL HR Services appoints HDFC Bank and Ambit Capital as IPO lead managers

IPO-bound CIEL HR Services has appointed HDFC Bank and Ambit Capital as the Book Running Lead Managers (BRLM), the CIEL group’s Executive Chairperson, Ma Foi K Pandiarajan, told businessline today. 

(BRLMs, or merchant bankers, take a company through the entire IPO process, creating marketing strategies for the IPO, determining pricing, and ensuring compliance.) 

The Chennai-headquartered staffing and HR services company’s ₹500-crore IPO is expected to hit the market in July 2024. ‘Offer for sale’ by existing shareholders is targeted to fetch ₹50 crore; the other Rs 450 crore would come from a fresh issue of shares. 

In the run-up to the IPO, CIEL HR Services has also converted from a public limited company to a private limited company and has decided to change its accounting financial year from April-March to calendar year. Consequently, its financial year 2023-24, will be a 9-month year, ending December 31, 2023. 

Alongside, the company will also complete its pre-IPO fund raise of ₹150 crore. The pre-IPO funds will be used to finance two acquisitions in the first half of 2024.  

While Pandiarajan did not wish to give details of the two larger acquisitions—larger than the spate of acquisitions it did in 2023—he did say that one is in the ‘integrated facilities management’ space and the other in ‘professional staffing’. 

Acquisition-driven EBITDA growth 

In 2022-23, CIEL HR Services recorded revenues of ₹814 crore and EBITDA of Rs 12 crore. In the current year (if taken as ending in March 2024), revenues would have grown to ₹1,274 crore and EBITDA to Rs 32 crore, Pandiarajan said.  

This sharp rise is due to the company’s four acquisitions made since January 2023 and it will make the fifth in a couple of weeks.  

In all, the company would have made five acquisitions in 2023, with two more (larger ones) coming in 2024. 

The first was the ₹25-crore purchase of 76 per cent in Jombay, a ‘talent assessment and development platform’ start-up, which will contribute ₹9 crore to this year’s EBIDTA. 

The next two acquisitions were of companies set up by Pandiarajan himself—Ma Foi Strategy (strategic advisory mainly to MSMEs) and Ma Foi Education (skill development). 

The fourth acquisition, announced on November 27, was that of Aargee Staffing Services Pvt Ltd, funded by a combination of cash and share swap. The rationale behind the 100 per cent buy-out is that it would give CIEL HR a foothold in a large Indian IT major—hastening the process of empanelment—as Aargee is already an empaneled service provider to the IT major. 

The fifth acquisition would be consummated in a couple of weeks, Pandiarajan said. 

Pandiarajan and his wife own 67 per cent of CIEL HR. Three executives of the company own 24 per cent and the rest by other investors. 

CIEL HR was set up in 2015. “In the last five years, we have grown by a CAGR of 61 per cent,” Pandiarajan said. 

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