Cafe Coffee Day parent company files for IPO to raise Rs 1,150 crore

Coffee Day Enterprises, the company that runs the country's biggest coffee chain under the brand Cafe Coffee day has submitted its papers with market regulator Sebi to get listed on the Indian bourses. The company intends to raise an estimated Rs 1,150 crore to aid its expansion plans and pay off debt. 

The parent company has investors like private equity giants KKR, Stanchart PE and New Silk Route. It has reserved Rs 15-crore worth shares for its staff.

As per the Draft Red Herring Prospectus (DRHP) filed with Sebi for the public offer, the company proposes to list its shares on the BSE and the NSE.

Out of the capital raised, the parent company plans to utilize nearly Rs 632 crore to pay off debt, and the remaining to open new stores, set up coffee bean roasting plants and make vending machines, the proposal said. In the next two financial years, the company plans to open over 215 new outlets and set up 105 kiosks. 

The main promoter, V G Siddhartha, also Chairman and MD, holds 54.78% stake, while all the promoters together have 92.74% holding in the company. Among other major shareholders, KKR holds 3.43% and Nandan Nilekani, Infosys co-founder and former chief of UIDAI, has 1.77% stake.

The Global Coordinators and Book Running Lead Managers to the issue are Kotak Mahindra Capital, Citigroup Global Markets India and Morgan Stanley India Company Private Limited. The Book Running Lead Managers to the issue are Axis Capital, Edelweiss Financial Services Limited and YES Bank Limited.

The shares will be offered to public investors through a Book Building Process wherein 50% of the net issue would be allotted on a proportionate basis to Qualified Institutional Investors, while the company may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis. One third of the Anchor Investor portion will be reserved for domestic mutual funds. All potential investors, other than Anchor Investors, can participate in this issue through an Application Supported by Blocked Amount (ASBA) process providing details of their respective bank account.

QIBs (except Anchor Investors) and Non-Institutional Bidders are mandatorily required to utilise the ASBA process to participate in this issue.

Coffee Day Enterprises operates the coffee business through a subsidiary, Coffee Day Global Limited (earlier known as Amalgamated Bean Coffee Trading Company Limited) and its subsidiaries. Coffee Day Global Limited had a total income of Rs 1,154 crore and operating profit of Rs 189 crore in fiscal 2013-14.

In addition to having the largest chain of cafes in India, the company also operates a vertically integrated coffee business which ranges from procuring, processing and roasting coffee beans to retailing coffee products across various formats.

It is the pioneer in the coffee shop chain business in India. The first CCD outlet had opened in Bengaluru in 1996. It now has a network of nearly 1,500 outlets and commands a market share of 46% with a network nearly four times larger than the cumulative footprint of the next four rivals.