Textbook publisher S Chand and Company has started negotiations with investment banks for bringing its initial public offering (IPO) later this year. If finalized, the upcoming IPO will further boost the company’s war chest which already includes investment of INR370 crore through a mix of primary and secondary transactions. According to a report by the Economic Times, the New Delhi-based publisher is in discussions with Edelweiss, JM Financial and Axis Capital.
At this point, it is at an exploratory stage only. We are focused on growing the business, and our core season, which is December to April period, is currently underway. An IPO is just one of the options to raise capital
– Himanshu Gupta, managing director, S Chand
The report comes on the heels of the company raising USD27 million from private equity (PE) investors such as Everstone Group and World Bank’s investment arm International Finance Corporation (IFC) in November 2015. Everstone is an old investor in S Chand and its investment dates back to 2012.
Like Gupta hinted, an IPO is only one of the options for the company which is known to be also looking to raise around USD40 million-50 million from other sources including PE investors. However, an IPO increasingly looks a certainty and the management has not been shy about it either. Earlier, Gupta has openly talked about the capital requirement of about USD150 million through external and internal accruals and the company targets reaching 100,000 institutions over the next five years and increasing its reach to about 100 million students.
Growth in digital and services
Majority of this growth will be from digital and services vertical. S Chand hopes to generate nearly 25% of its annual revenues from digital and services vertical by 2020 and has been making acquisitions and investments in the digital and ed-tech and education services segments. The company currently publishes a variety of educational books catering to school going students up to 12th standard (or K-12) as well as to students in colleges and universities. Apart from K-12 segment, S Chand also publishes books for competitive exams.
After a strong IPO market in 2015 saw a number of private equity exits through primary market, the trend is continuing in 2016. Interestingly, a number of companies backed by Everstone have lined up IPO plans. This includes healthcare and fitness company VLCC, agri-logistics player Sohan Lal Commodity Management and commercial vehicles finance player Hinduja Leyland Finance.