Ahead of IPO, Chemplast Sanmar raises over Rs 1,732 crore from anchor investors

The Rs 3,850-crore initial public offer (IPO) comprises a fresh issue of equity shares worth Rs 1,300 crore and an offer for sale of Rs 2,550 crore.

The offer for sale comprises the sale of Rs 2,463.44 crore by Sanmar Holdings Ltd and Rs 86.56 crore by Sanmar Engineering Services Ltd. The issue, with a price band of Rs 530-541 a share, will open for public subscription on August 10 and conclude on August 12.

Chennai-based Chemplast Sanmar is a leading specialty chemicals manufacturer with focus on specialty paste PVC (polyvinyl chloride) resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors.

The company said it would utilise an aggregate amount of Rs 1,238.25 crore from the net proceeds towards the early redemption of the non-convertible debentures (NCDs) issued by it. In addition, funds will also be used for general corporate purposes.

"The early redemption of the NCDs in full will help reduce our outstanding indebtedness and debt servicing costs, assist us in maintaining a favourable debt to equity ratio and enable utilisation of our internal accruals for further investment in business growth and expansion," the company said in the red herring prospectus.

"In addition, we believe that our improved leverage ratio, consequent to such redemption of NCDs, will improve our ability to raise debt in the future to fund potential business development opportunities and plans," it added.

A total of 75 percent of the issue size has been reserved for qualified institutional buyers (QIBs), 15 percent for non-institutional investors and 10 percent for retail investors.

Investors can bid for a minimum of 27 equity shares and in multiple of 27 equity shares thereafter. Chemplast Sanmar was delisted nearly a decade from the stock exchanges. It was delisted from the BSE, the NSE and MSE with effect from June 25, 2012, June 18, 2012, and June 25, 2012, respectively.

ICICI Securities, Axis Capital, Credit Suisse Securities (India) Private Ltd, IIFL Securities, Ambit, BOB Capital Markets, HDFC Bank, IndusInd Bank and Yes Securities are the merchant bankers to the issue.