New Delhi-based Sohanlal Commodity Management is looking to attract an investment of INR100 crore before approaching SEBI with its initial public offering (IPO) plans. A report in Mint said that the agri-warehousing firm, led by Sandeep Sabharwal, is in discussions with multiple parties for investment including Rabo Equity Advisors, IDFC Private Equity and a North America-based investor. Sohanlal Commodity Management already counts private equity players Everstone Capital, Mayfield Advisors and Nexus Venture Partners among its investors. While the pre-IPO deal is expected to be finalized in the next two months, the company has already retained ICICI Securities Ltd and HDFC Securities to manage the IPO, said the newspaper. It is noteworthy that no prospectus has been filed by Sohanlal Commodity Management with SEBI for the IPO so far.
As mentioned above, Sohan Lal Commodity Management has attracted private equity (PE) funds in the past as well. This includes a combined investment of INR126.56 crore (USD23.5 million) in November 2012 by Everstone Capital and ICICI Bank’s Emerging India Fund. Prior to this, the company received INR35.5 crore from Mayfield India and Nexus Venture Partners in March 2011.
Rabo Equity Advisors and IDFC Private Equity have some experience in financing agri-warehousing firms. Along with other PE players, Rabo Equity Advisors invested INR100 crore in National Collateral Management Services in May 2011 while IDFC Private Equity put in INR150 crore in Staragri Warehousing and Collateral Management in February 2012. Bangalore-based National Collateral Management Services also counts Prem Watsa’s Fairfax India, World Bank’s investment arm IFC and Indian Farmers Fertiliser Cooperative (IFFCO) among its investors.
Gaping warehouse shortfall
Given the huge shortfall of warehouses in India, especially in the agriculture sector which has been traditionally served by the likes of Food Corporation of India, investors see this as a sure shot way of making long term gains as retail demand and consumption pick up in the smaller cities and towns of India.
Apart from agriculture commodity storage, Sohan Lal Commodity Management offers allied services like fumigation, testing and certification and funding against storage receipts. As of June 2015, the company claims to manage a network of more than 750 warehouses and 15 cold storages across 17 states with a total capacity of over 1.74 Million metric tones.