India: Hinduja Leyland Finance defers $108m IPO plans

Visual sourced from Ashok Leyland website.

Hinduja Leyland Finance Ltd (HLF), a financier of commercial vehicles, has deferred its plan to go for a public listing, said two people aware of the development.

The firm, which received permission from the stock market regulator for an initial public offering (IPO) last year, has decided to let the approval lapse at the end of this month.

“The company had received Sebi’s approval towards the end of June last year. The Sebi approval is valid for 12 months and that period for HLF is coming to an expiry. The company will let its Sebi approval expire,” said one of the two people cited above, both of whom requested anonymity.

Various Hinduja group firms together hold around 84.63% in HLF. Of this, the flagship Ashok Leyland holds 57.43%.

Private equity investor Everstone Capital holds a 14% stake in the company.

In March 2016, HLF filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi). According to the draft prospectus, HLF planned to raise Rs500 crore primary capital. Everstone Capital also planned to sell part of its stake through an offer for sale.

Including the primary offer and the offer for sale, the total size of the IPO was expected to be around Rs700 crore.

HLF raised capital earlier this year through a rights issue in which all its shareholders participated and that capital should support the company’s operations in the near term, the person cited earlier added.

“No new timelines have been drawn up yet for a revised IPO,” he said. Mint reported in January that HLF had raised Rs250 crore from its shareholders through a rights issue. Ashok Leyland, the largest shareholder in HLF, invested around Rs145 crore.

“Owing to the uncertainty in the economy on account of demonetization, the IPO slated for Q3 last year was postponed. Necessary equity capital was brought in by existing shareholders. We are now reviewing the situation,” said HLF chief executive officer Sahin Pillai.

Existing shareholders can bring in the capital necessary to meet the growth plans of the company, he added. “Capital is not a constraint at all as all shareholders are well-placed to infuse equity,” said Pillai.

The postponing of its IPO comes at a time when the primary market has seen a large number of firms managing to raise significant sums of capital. Private equity funds have used the IPO route to exit investments and investors making strong returns on their IPO bets.

Till 31 May, eight companies raised Rs6,335 crore through IPOs, data from primary market tracker Prime Database shows. In 2015 and 2016, 47 companies raised a total of Rs40,107.9 crore through the IPO route, data shows.

HLF was founded in 2008 as a non-banking financial company. It provides customized finance for utility vehicles, tractors, cars and two-wheelers among other vehicles, focusing on the semi-urban and rural sector.

For the year ended 31 March, HLF’s revenue grew by 41% to Rs1,145.69 crore from a year earlier, documents filed with the registrar of companies show. In the same period, profit grew 34.5% to Rs150 crore.

In 2015-16, HLF witnessed a 37% growth in disbursements to Rs7,075 crore from the previous year’s Rs5,125 crore. Assets under management grew by a little over 50% to Rs10,001 crore, the documents show.

In July 2013, Mint reported that Everstone had invested Rs200 crore in HLF. Everstone is an India- and Southeast Asia-focused private equity and real estate investment firm with assets under management of $3.3 billion.

Also Read: Ashok Leyland finance arm raises $36.7m from group firms, Everstone

India: Hinduja Leyland Finance, CL Educate file IPO papers

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.