India: DMart promoters look to sell 2.28% stake via OFS

Avenue Supermarts has been opening 10-15 D-Mart stores per annum and hopes to continue or accelerate it depending on the market, says CEO Neville Noronha. Photo: Aniruddha Chowdhury/Mint

Avenue Supermarts Ltd, which runs the supermarket chain DMart, on Thursday said its promoters will sell up to a 2.28% stake through an offer for sale (OFS) that will fetch as much as 3,032.5 crore ($426 million).

Promoters Radhakishan Damani, Gopikishan Damani, Shrikantadevi Damani and Kirandevi Damani will offload a total of 14.8 million shares through the share sale, Avenue Supermarts said in a regulatory filing. The shares will be sold at a floor price of 2,049, a 19.5% discount to the closing price of 2,544.15 on Thursday.

The OFS will open on Friday for institutional investors, while retail investors will be able to subscribe on Monday.

Axis Capital and BofA Securities are advising DMart on the share sale.

Mint first reported on 6 February that DMart promoters are planning to sell shares through an OFS.

The promoter stake sale is an extension of the qualified institutional placement (QIP) offering launched by the retailer on 5 February, which saw DMart sell shares worth 4,098 crore to institutional investors.

Investors who bought shares in the QIP included Lone Cypress Ltd, Government of Singapore, Europacific Growth Fund and ICICI Prudential Bluechip Fund.

Collectively, the two share sales are aimed at reducing promoter stake to meet Securities and Exchange Board of India (Sebi) norms on minimum public shareholding, which mandate companies to reduce promoter shareholding to 75% within three years of listing.

For DMart, which went public in March 2017, that deadline expires next month.

Post the QIP, promoter stake in the company came down to around 77.28%, down from 79.73% as of 31 December.

The QIP while allowing Damani to pare his stake, also helped the retail chain raise growth capital to fund the expansion of its store network.

“Our company proposes to utilize the net proceeds to augment long-term resources for financing our future expansion plans, which include funding expenditure towards implementation of our strategy on expanding our store network and increasing the efficiency of our supply chain network, including warehousing facilities and related acquisition of land,” the company said in a prospectus for the QIP offering.

The funds will also be used for strategic investments or acquisitions, as well as to repay loans.

“We intend to further enhance our position in the retail supermarket business in Maharashtra, Gujarat, Telangana, Andhra Pradesh and Karnataka by increasing our market penetration and expanding our store network in these states. We also intend to strengthen our store network in Madhya Pradesh, Chhattisgarh, Tamil Nadu, Rajasthan, Punjab and NCR,” according to the prospectus.

As of 31 December, DMart had 196 stores with a retail floor space of 7 million sq. ft. across 72 cities and towns with Maharashtra contributing the biggest chunk of the portfolio at 74 stores, followed by Gujarat at 35 stores.

This article was first published on livemint.com.

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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