Multiples PE looks to partially exit Milltec Machinery via IPO

Multiples PE founder Renuka Ramnath.

Renuka Ramnath-led private equity firm Multiples Alternate Asset Management (Multiples PE) is looking to part exit its investment in farm equipment manufacturer Milltec Machinery Pvt. Ltd through an initial public offering (IPO), two people aware of the development said.

Multiples PE invested around Rs250 crore in Milltec in 2013 to acquire a 50% stake in the company. Milltec manufactures agro processing equipment, supplying products to the grain milling industry for cleaning, de-husking, polishing, grading, whitening and sorting.

“Milltec plans to go public soon. The company has appointed investment bank Motilal Oswal Investment Advisors to advise on the same and is in talks to appoint a few more bankers for the IPO. The IPO will be a mix of primary and secondary share sale. Multiples will part exit through the IPO,” said one of the persons cited above, requesting anonymity as he is not authorized to speak with the media.

The IPO size is expected to be around Rs550 crore and the company is likely to file its draft prospectus with the regulator by end of the month, he added.

“There are several tailwinds helping Milltec to grow such as increasing modernisation in the sector due to growing demand from middle class for better quality grain, advancement in processing technology, replacement demand of old equipment and various government initiatives,” said the second person cited above, also requesting anonymity.

Milltec has also been focusing on growing its business through entry into overseas markets, he added. “They are present in the SAARC and ASEAN countries and they entered Africa last year,” he said.

Emails sent to Multiples PE founder Renuka Ramnath and Motilal Oswal did not elicit any response. “We do not have any comments to offer at this stage,” R. Ravindranath, managing director of Milltec Machinery Pvt. Ltd said in an email response to Mint’s queries.

Milltec recorded a profit of Rs16.1 crore on an operating income of Rs177.1 crore for the year ending 31 March 2016, according to a March 2017 report by credit rating agency Icra.

Despite its moderate scale of operations in a highly competitive and fragmented industry, Milltec holds an edge over competition due to its strong after sales support system, its established relationships with customers and pan-India presence, Icra noted.

“Over the years, the company has strengthened its product profile through research and development efforts thus diversifying its revenue mix. The company’s established brand, regular additions to product offerings and healthy market share in the domestic rice milling equipment industry have supported its revenues over the past,” the report added.

Multiples PE has part exited some of its investments in the last couple of years.

In January 2017, Multiples part exited its holding in multiplex chain PVR Ltd by selling stake to American PE firm Warburg Pincus. Warburg made an investment of $120 million in PVR, buying stake from Multiples PE and the promoter of PVR.

In October, Multiples sold stake worth Rs450 crore in the IPO of Indian Energy Exchange Ltd.

So far this year, 14 companies have raised Rs18,591.7 crore through the IPO route, while in 2017, 36 companies raised Rs67,147.1 crore through IPOs, data from primary market tracker Prime Database shows.

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