Mumbai-based Wadhawan Food Retail Pvt Ltd (WFRL) is planning an public offer by mid-2009.
Plans IPO by 2009; parent to spend Rs 1,400 cr on expansion
MUMBAI: Mumbai-based Wadhawan Food Retail Pvt Ltd (WFRL) is planning an public offer by mid-2009. Part of the Wadhawan Group, WFRL currently operates 90 food and grocery (F&G) stores and six home décor stores across India.
Kapil Wadhawan, spokesperson for the Wadhawan Group, told DNA Money the IPO option will be explored in the next 12-18 months for the food retail business.
“We have already invested over Rs 125 crore in this business and going forward the plan is to invest over Rs 1,400 crore. I wouldn’t say that the entire investment has been or will be through internal accruals, the family will invest to the extent required and the balance will be raised through the capital markets to undertake rest of the expansion,” said Wadhawan.
The retail arm’s current market capitalisation has not been determined as the F&G business foray is still in the capex/expansion mode.
By the end of this financial year (March 31, 2008) the promoters intend to increase their current network of close to 100 stores to more than 200 outlets. And over the next four years, the management is looking at a topline for Wadhawan Food Retail to be in excess of Rs 5,000 crore.
In another development, the second-largest housing finance company in the private sector, Dewan Housing Finance Corporation Ltd (DHFL) picked up 19.9% stake in the company for an investment of Rs 5 crore.
Wadhawan, vice-chairman and MD of DHFL, said the move will not only give Dewan Housing a suitable opportunity for trading or off-loading some of the stake in the market, which is unlikely but also provide sufficient opportunity for the investors to leverage both on DHFL and WFRL shares in the market.
Being a strategic investment by DHFL the Wadhawan family will continue to retain the balance 80% stake.
Thus currently 4.9 million shares of WFRL at par (Rs 10 a share) have been transferred to DHFL and according to Wadhawan if at a later stage the board decides to increase the company’s stake to over 20%, “we will certainly look into it then”, Wadhawan said.
Calling it a win-win situation for both the food retail business and DHFL, Wadhawan sees strong distribution network that DHFL can leverage for its housing finance business.
“Secondly both being low margin but high volume businesses, we will be able to get about 80% of the consumer’s wallet by effectively exploiting this combination,” said Wadhawan.
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