India’s primary market saw heightened activity last week with a positive listing of Affle India as well as IPOs of microfinance lender Spandana Sphoorty and solar energy player Sterling and Wilson Solar. It almost went unnoticed that another important development took place in the form of three IPO hopefuls filing draft prospectus with SEBI during the week. These include CSB Bank, Mazagon Dock Shipbuilders, and Chemcon Speciality Chemicals. Of the three, CSB Bank IPO will be closely watched as bank listings are rare in India.
CSB Bank IPO: Prem Watsa’s Fairfax takes center stage
CSB Bank, formerly known as Catholic Syrian Bank, is promoted by Canadian billionaire Prem Watsa. CSB Bank IPO will be a mix of fresh issuance as well as a sale by existing investors. In total, the IPO is likely to mobilize INR400 crore (INR4 billion) with a relatively small amount of INR30 crore coming from fresh shares. Watsa’s Fairfax India Holdings owns 51% equity stake in the Thrissur-based bank. This high promoter shareholding was made possible through a special nod from the central bank which in turn mandated a stock market listing. CSB Bank IPO will be handled by IIFL and Axis Capital.
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The bank had earlier filed IPO application and the same was cleared by SEBI in July 2015. However, as we reported earlier, the IPO got delayed due to high valuation and existing investors turning to other banks to sell their stake.
Mazagon Dock Shipbuilders makes a fresh bid
Apart from CSB Bank IPO, Mazagon Dock Shipbuilders also filed a draft prospectus. The IPO of the PSU – operating under the Ministry of Defense – will be a net offer of 28,012,500 shares, excluding the shares meant for employees. Mazagon Dock Shipbuilders IPO will be purely an offer for sale (OFS) by the Government of India which currently owns 100% of equity through President of India.
This is the second time the company has filed draft prospectus. The manufacturer of warships and submarines received SEBI’s approval for listing in August 2018. Since the SEBI approval is valid for 12 months, the company has filed draft prospectus again. This indicates the company is hopeful of listing itself in the coming months as sentiments improve.
Chemcon Speciality Chemicals IPO: Chemicals for pharmaceutical and oilfield applications
Chemcon Speciality Chemicals – a manufacturer of pharmaceutical and oilfield chemicals – has also filed draft prospectus. The Vadodara-based company plans to issue fresh shares worth up to INR175 crore while promoters plan to offload 43 lakh (4.3 million) shares. In total, Chemcon Speciality Chemicals IPO is expected to mobilize around INR350 crore.
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In its draft papers, the company said it is the only manufacturer of HMDS (Hexamethyldisilazane) in India and eighth largest globally, based on production in 2018. It also claims to be the largest manufacturer of CMIC (Chloromethyl Isopropyl Carbonate) in India and the second largest manufacturer worldwide.
India is currently a net importer of HMDS, with about 52% of India’s current domestic demand being catered by imports from China and Germany. Similarly, India is a net importer of CMIC, with about 50% of domestic demand being catered to by imports from China.
Its key customers include pharmaceutical companies like Aurobindo, Laurus Labs, Ind-Swift Labs and Hetro Labs and exports accounted 32% of its revenues in FY2019.