For third time this year, Gaja Capital to take the IPO route for partial exit
For third time this year, Gaja Capital to take the IPO route for partial exitPrivate equity firm Gaja Capital is about to mark its third partial exit through the IPO route this year as its portfolio company, CL Educate, gears up for its public market debut next month.
The CL Educate initial public offering of about 47 lakh shares, expected next month, will consist of about 20.6-lakh fresh shares and an offer for sale of up to 26.3-lakh shares by the company''s existing stakeholders.
The New Delhi-based education services venture, which is focused on test prep services and publishing, aims to raise about Rs 350 crore from the stake sale. The final offer documents are expected to be filed with the Securities & Exchange Board of India, the market regulator, later this month.
Retail and institutional investors will watch the IPO keenly, given that it is one of the few by an education services company in the recent past. Education companies that have gone public previously have had a poor track record.
For third time this year, Gaja Capital to take the IPO route for partial exitOn Tuesday, the Madras High Court appointed a provisional liquidator to take immediate possession of the assets of Everonn Education, following charges of fraud and misappropriation. Separately, it was reported that Zee Learn put its merger with Tree House Education on hold, deciding to re-evaluate the deal following the latter''s March quarter results.
"There have been significant governance issues in the past and we, as promoters, have been very sensitive about that. But we are hoping to change investors'' mindset and are confident that the market will view it positively," Nikhil Mahajan, chief financial officer of CL Educate, told ET.
The IPO will be the third in which Mumbai-headquartered Gaja Capital is participating in 2016 following the strong public market debuts of two portfolio companies, RBL and TeamLease. The issues were oversubscribed by 70 and 66 times, respectively.
"We took some counter-cyclical bets, given that India, for the period 2008-13, did not play out as per everybody''s expectations," said Gopal Jain, managing partner at Gaja Capital. "This new IPO market is characterised by growth and governance, which are much stricter filters, and are keeping away a lot of companies."
Gaja Capital invested in CL Educate in 2007 and holds about a 20% stake in the company, having cumulatively put in about Rs 78 crore.
It is expected to sell about a third of its holding. HDFC is the other major institutional stakeholder in the company.
"It is a robust IPO market, but there are also a fair number of companies that want to go public, but can''t, due to their lack of growth. TeamLease and CL Educate are our bets on the jobs market, which is a great derivative of the growth of the Indian economy," said Jain.
I t’s been a blockbuster year for the country’s IPO market, with 50 companies raising almost $3 billion. Another 22 companies are lined up for the year, according to Baker & McKenzie, bringing the year-end estimated total deal value to $5.8 billion, a six-year high.
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