India: Sansera Engineering looks to raise up to $147m via IPO

Photo: Mint

Bengaluru-based auto-component maker Sansera Engineering Pvt. Ltd has started a process to appoint investment bankers for its initial public offering (IPO) that could see the company raise around Rs750-1,000 crore, said three people aware of the development.

The company is backed by US-based private investment group The Rohatyn Group (TRG).

“Sansera has been meeting investment banks for pitches for the mandate to manage its IPO process. They are in discussions and will appoint a syndicate of bankers in the coming weeks to start work on the draft IPO prospectus,” said one of the person cited above, requesting anonymity, as he is not authorized to speak with the media.

The company is looking for a valuation of around Rs3,000 crore, he added.

According to the second person, the IPO will be a mix of fresh issue of shares to raise capital for investing in the business and a secondary sale of shares, especially by private equity investor TRG. He too requested anonymity.

TRG holds a 51% stake in Sansera Engineering. The stake was acquired by Citi Venture Capital International (CVCI), the emerging markets private equity arm of US bank Citigroup Inc., for Rs340 crore ($56 million) in July 2013.

In December 2013, TRG acquired the CVCI business from Citigroup.

“As a matter of policy we do not respond to media queries on our business,” said a spokesperson for TRG in an email response to Mint’s queries. Emails sent to Sansera Engineering’s top management did not elicit any response.

For the financial year 2016-17, the auto-component maker reported a consolidated revenue of Rs1,034.2 crore, a growth of 14.8% over the previous year’s revenue of Rs901 crore, according to data from the company’s filings with the Registrar of Companies (RoC).

The company’s Ebitda (earnings before interest, tax, depreciation and amortization) grew by 9.3% to Rs174.4 crore in fiscal 2016-17.

However, the company’s consolidated profit grew just 2.4% to Rs68.8 crore in 2016-17, data shows.

Founded in 1987, Sansera’s product portfolio encompasses components such as crankshaft assemblies, rocker arms, gear shifter forks, common rail, connecting rods and others.

Sansera has seven manufacturing facilities spread across the states of Maharashtra, Karnataka, Himachal Pradesh and Uttaranchal.

Several auto component makers have used the buoyant primary market to raise funds and provide exit to their private equity investors.

In the last three years, auto component makers Sandhar Technologies Ltd, Endurance Technologies Ltd, GNA Axles Ltd and Precision Camshafts Ltd have raised funds through IPOs.

In March, Varroc Engineering, another auto component maker filed preliminary papers with markets regulator to float an initial public offer.

Varroc is engaged in design, manufacture and supply of exterior lighting systems, plastic and polymer components and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off-highway vehicle directly worldwide.

This article was first published on livemint.com.