Apart from serving delicious coffee, Cafe Coffee Day (CCD) chain of restaurants may soon provide investors an option to make money. Coffee Day Enterprises Ltd (CDEL) – the chain’s holding company is expected to file draft red herring prospectus (DRHP) with capital market regulator Securities and Exchange Board of India (SEBI) as early as next month. The high-profile company plans to raise INR1,150 crore through its initial public offering (IPO), three people with knowledge of the matter told the Live Mint business daily.
The funds raised from the IPO will be used towards repayment of debt and in opening of new stores across the country. Around INR750 crore will go towards paying back debt while another INR290 crore will be used to open new stores and refurbish the existing ones.
In the latest round of funding in March, CDEL was valued at INR6,200 crore. The funding round raised INR100 crore from Infosys Ltd co-founder Nandan Nilekani, investor Rakesh Jhunjhunwala’s Rare Enterprises and stock broker Ramesh Damani. Apart from the popular coffee chain, CDEL’s holdings include Coffee Day Hotels and Resorts Pvt Ltd, Global Technology Ventures Ltd and Tanglin Developments Ltd.
A source indicated that existing investors are not looking to exit in the IPO which means this could be a fresh issue of shares. In February 2010, KKR India Advisors Pvt. Ltd, New Silk Route PE Asia Fund Lp and Standard Chartered Private Equity Fund invested USD149.07 million in the holding company. Sequoia, which invested about USD10 million in the holding company in 2006, exited in 2012.