Mumbai-based Hexagon Nutrition filed its draft red herring prospectus with Securities Exchange Board of India to raise up to Rs 600 crore through an initial public offering.
The pure-play nutrition company plans to raise capital through a fresh issue of shares worth Rs 100 crore, and an offer for sale of more than 3.01 crore equity shares by promoters and investors, according to its prospectus.
The offer for sale comprises 1.78 crore equity shares by promoters Arun Purushottam Kelkar, Subhash Purushottam Kelkar, Anuradha Arun Kelkar, and Nutan Subhash Kelkar. Among the investors, Somerset Indus Healthcare Fund I will offload 1.22 crore equity shares, and Mayur Sirdesai is going to sell 73,668 shares via offer for sale.
In 2016, offshore private equity firm Somerset Indus Healthcare Fund-I, along with Mayur Anand Sardesai, an advisor and director at Somerset Health Capital Advisors, had invested Rs 25 crore for a 10% stake in the company. Both these investors will now exit the company through its public issue. Currently, Somerset holds 1,21,35,056 compulsorily convertible preference shares and Mayur Sirdesai holds 73,156 such shares.
According to its draft paper, all outstanding convertible preference shares will be converted into maximum 1,22,76,818 equity shares comprising 1,22,03,250 equity shares to Somerset and 73,568 shares to Mayur Sirdesai before filing the red herring prospectus with the Registrar of Companies.
Equirus Capital and SBI Capital Markets are the book running lead managers to the issue.
Where will the proceeds go?
The issue size will be approximately in the range of Rs 500-600 crore.
Of the net proceeds from its fresh issue, about Rs 33.5 crore will be used for repayment of debt, the company said. Besides, Rs 15 crore will be used for funding incremental working capital requirements and Rs 19.17 crore for expansion of Nashik facility. The company also plans to pump in Rs 7.15 crore towards capital expenditure requirements of its subsidiary’s – Hexagon Nutrition (International) Private Limited – Thoothukudi plant.
The rest of the net proceeds will be used for general corporate purposes.
Revenue from operations was impacted in FY20 due to lower export sales of premix formulations owing to global disruptions caused due to Covid-19 pandemic. Its revenue, however, rose to Rs 209.97 crore in FY21 from Rs 203.84 crore in FY20 as demand for premixes and therapeutic foods rose.
The Mumbai-based company has seen its Ebitda margin improve to 16.38% in FY21 from 11.16% in FY19. It has also managed to reduce its consolidated net debt significantly. As of September 30, 2021, it had a positive cash flow at Rs 4.45 crore, the company said in its draft RHP.