India: DMart looks to raise up to $575m through QIP to fund business expansion

D-Mart. Photo: Aniruddha Chowdhury/Mint

Avenue Supermarts Ltd, which runs the popular supermarket chain DMart, on Wednesday launched a qualified institutional placement (QIP) offering to raise up to Rs4,098 crore.

The company will use the money to expand its store network, invest in the supply chain and repay loans.

In a stock exchange filing, the company said it will sell as many as 20 million shares through the QIP, at a floor price of 1,999.04 apiece. Avenue Supermarts’ shares closed at 2,249.3, up 4.35% on BSE on Wednesday.

According to a term sheet seen by Mint, the company is offering shares at a price of 2,049 per share.

“Our company proposes to utilize the net proceeds to augment long-term resources for financing our 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,” Avenue Supermarts said in a prospectus filed with the stock exchanges.

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,” the prospectus said.

As of 31 December, DMart had 196 stores with a retail floor space of 7 million sq. ft, across 72 cities and towns.

Investment banks Axis Capital, BofA Securities and others are advising DMart on the share sale.

While the company is eyeing growth capital through this fundraise, the share sale was also necessitated by Sebi norms that require listed companies to reduce their promoter shareholding to 75% within three years from listing. For Avenue Supermarts, that deadline ends in March. The company went public in March 2017.

The QIP will result in promoter shareholding coming down to 77.3% from 79.73% currently.

The QIP will be followed by a secondary share sale, a so-called offer for sale (OFS), by the promoter to further bring down shareholding to 75%.

This article was first published on livemint.com.

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Singapore Reporter/s

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).

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

  • 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. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.