Global financial major Merrill Lynch, Deutsche Bank and Indivision, the private equity arm of Future Group, are in race to buy into Cox & Kings, one of India's oldest travel services firm. A source said the tour operator is considering a pre-IPO placement of its shares with some investors and is in talks with the foreign financial institutions and private equity funds. However, another source said US-based Merrill Lynch is the frontrunner. The deal is being brokered by City-based Enam Securities.
The primary objective of companies opting for a pre-IPO placement is that it sets the benchmark to identify the public issue price. The promoters – the Peter Kerkar family – plans to sell 8-10% to the new investor for Rs 135 crore. The deal, if consummated, will put the valuation of Cox & Kings at Rs 1,350 crore. The company plans to utilize the funds to expand the business, including acquisitions.
Cox & Kings has proposed a public issue of 87 lakh equity shares of Rs 10 each for cash at a price to be decided through a 100% book- building process. It filed its draft red herring prospectus with market regulator Sebi recently. The company, which till now functioned from a leased building in Mumbai, plans to have its own corporate headquarters in the financial capital. Proceeds from the issue may also be invested in the company's overseas subsidiaries.
The IPO will comprise a net issue of 86 lakh equity shares to the public and a reservation of up to one lakh shares for permanent eligible employees. It will constitute 23.75% of the company's post issue paid up capital. Shares are proposed to be listed on BSE and NSE.
Interestingly, unlike travel industry twin hotels not too many travel service firms are listed. Exceptions being Thomas Cook (India) and Kolkata-based, ITC-owned International Travel House. In that case, Cox & Kings is the first travel firm to tap the capital market in recent years. Tour operators are largely unorganized in nature. Travel and tourism is growing at 30% year-on-year, according to industry experts. Cox & Kings offers a one-stop shop for all segments of travellers. It specializes in destination management, leisure travel, NRI holidays and trade fairs and has offices worldover.
Source: Times of India