TPG-backed RR Kabel IPO gets green signal from Sebi

RR Kabel, a manufacturer of wires and cables, has received permission from the market regulator Sebi to proceed with its IPO plans.

The initial public offering consists of a fresh issue of Rs 225 crore worth of shares by the company and an offer for sale (OFS) of 1.72 crore equity shares by promoters and investor TPG.

TPG Asia VII SF Pte Ltd, a private equity firm based in the United States, will sell 1.29 billion equity shares via OFS. According to draft documents, it possesses a 20 percent stake in the consumer electrical company, or 2.33 billion equity shares.

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On August 24, Sebi issued an observation letter regarding the draft papers submitted by the company. In Sebi parlance, observation signifies that the company can launch its IPO for subscriptions.

In May 2023, the TPG-backed company submitted a proposed red herring prospectus to the Sebi.

The operator of the wires and cable products brand RR Kabel will use net proceeds from a fresh issue to repay debts totaling Rs 170 crore. The remaining funds will be utilized for routine business purposes.

RR Kabel asserts that it is one of the top corporations in the Indian consumer electrical industry (wires and cables and fast-moving electrical goods segment). The market value of the Indian consumer electrical industry was estimated at Rs 1.61 lakh crore in FY22 and is projected to increase at a compound annual growth rate (CAGR) of 11% between FY22 and FY27, reaching approximately Rs 2.66 lakh crore.

The company compares itself to Havells India, Polycab India, KEI Industries, Finolex Cables, and V-Guard Industries, which are also publicly traded.

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In the nine-month period ending in December of FY23, RR Kabel reported a net profit of Rs 124.6 crore, a decrease of 20.1% compared to the net profit of Rs 156 crore in the prior year's same period. However, revenue from operations remained robust at Rs 4,083 crore, up 36.6% during the same time period.

The issue's merchant financiers are Axis Capital, HSBC Securities and Capital Markets (India), Citigroup Global Markets India, and JM Financial.