Cafe Coffee Day to launch IPO next week
The company behind Cafe Coffee Day is all set to launch the country's biggest IPO in nearly three years, next week. The aim is to raise about $176 million through the IPO. According to the IPO prospectus, the share sale will begin on 14 October; the price-band is set between Rs.316-Rs.328 per-share. Private equity firm KKR & Co. is backing Coffee Day Enterprises Ltd.
Cafe Coffee Day was launched in 1996 by V.G. Siddhartha, who is the 73rd richest man in India. In 2011, Financial Times termed him as "the Coffee King of modern India".
The country's largest retail cofee house chain, Cafe Coffee Day unveiled a new logo and a complete new look for the outlets giving them a complete makeover. The company planned to invest Rs 130 crore to open 180 outlets and revamp the existing ones with the new logo and decor. As of 2010, the chain had around 970 company-owned outlets.
The company had approximately 600 kiosks across the country and 30,000 vending machines. It sells everything from ground coffee beans to espresso machines to cookbooks online. It started Café Coffee Day Lounges for families and Café Coffee Day Square for single-origin, higher-end coffees from Latin America, Africa and India. This move had been done to cater to the customer's evolving tastes.
Café Coffee Day chain has developed a global presence by opening 16 stores in Austria, the Czech Republic and Malaysia.
Amalgamated Bean Coffee Trading Co. Ltd, which runs the Café Coffee Day chain, has recorded sales growth drop over the past two years. Competition for Café Coffee Day has been increasing with the entry of the world's largest coffee chain Starbucks, which launched its first store in India in October 2012. In comparison, Costa Coffee, KFC and Pizza Hut have reported increase in revenues.
Homegrown cafe chain, Café Coffee Day planned to add 150 cafes and 120 Xpress outlets across the country in 2014. It is predicted that this will push its revenue growth to 18-20% While the cafes will be sized between 800 and 1,000 sq ft each, the Xpress outlets which are small and on-the-go formats will be of 125 sq ft each.
Nandan Nilekani, Infosys cofounder and investor Rakesh Jhunjhunwala bought stakes in the entity that owns the Café Coffee Day chain ahead of an initial share sale. Nilekani and Jhunjhunwala will together invest Rs 100 crore in the pre-IPO placement, valuing the company at Rs 6,000-6,500 crore. Radhakishan Damani, founder of retail chain D-Mart is also expected to buy undisclosed stakes in the company.
Coffee Day Enterprises has filed a draft to raise Rs. 1150 crore through an initial public offering to expand its retail network and reduce debt. It plans to use Rs 632 crore to repay loans and the rest to open stores, manufacture vending machines and set up roasting facilities. The company plans to open 215 new outlets and 105 kiosks.
The very first sale of stock by a private company to the public is called 'Initial Public Offering'. IPO is generally issued by companies looking for capital to expand.
