Coffee Day to hit market next week with biggest IPO in three years

Coffee Day Enterprises, which runs the nation's biggest coffee chain, is eyeing a valuation of as much as Rs 6,750 crore based on the issue price of its initial public offering (IPO) next week making it the biggest IPO in the domestic market in close to three years.

Coffee Day, which is selling new shares in the IPO, will dilute as much as 17.55 per cent on a post-issue basis to raise up to Rs 1,150 crore, according to a presentation made at a company news conference in Mumbai on Wednesday. The company is selling shares in a price range of Rs 316-Rs 328 in the issue, which will open on October 14 and close on October 16. The company will sell Rs 340 crore worth of shares to cornerstone investors ahead of the IPO, managers to the IPO said.

Coffee Day Enterprises, which counts private equity KKR and New Silk Route among its investors, runs the Cafe Coffee Day cafes with more than 1,500 stores in India and 14 overseas. "Of the money raised, Rs 635 crore will go into reducing the debt in the holding company while we have committed to our investors, Rs 290 crore over the next 18 months will go towards expansion of coffee business. The surplus of Rs 125 crore will also go towards the coffee business," V.G. Siddhartha, chairman, Coffee Day Enterprises said. "We will open 135 new stores every year."

The company also owns about 16 per cent of software services exporter MindTree and about 53 per cent in Sical Logistics.