Godavari Biorefineries Ltd, a well-known producer of ethanol and bio-based chemicals in India, is set to launch its ₹555 crore Initial Public Offering (IPO) on October 23. The IPO price band has been fixed between ₹334 and ₹352 per share. The offering presents a chance for investors looking to invest in IPO opportunities in the fast-growing bio-based chemicals sector.
IPO details and subscription timeline
The IPO will open for general subscription on October 23 and close on October 25. A day prior to the official opening, October 22, anchor investors will have an exclusive window to place their bids. The offering combines a fresh issue of equity shares worth ₹325 crore with an Offer for Sale (OFS) of 65.27 lakh equity shares, which are valued at ₹230 crore at the upper end of the price band. This structure brings the total IPO size to ₹555 crore.
Offer for Sale and fresh issue allocation
As part of the OFS, private equity investor Mandala Capital AG Ltd will divest 49.27 lakh shares. Proceeds from the fresh issue are earmarked for strategic financial goals; around ₹240 crore will be used for debt repayment, while the remaining funds will support general corporate initiatives. At the upper end of the price band, Godavari Biorefineries' market valuation stands at approximately ₹1,800 crore.
Allocation strategy for different investor categories
The IPO allocation strategy reserves 50% of the total issue size for Qualified Institutional Buyers (QIBs), while 35% is set aside for retail investors. The remaining 15% will be available for non-institutional investors. This distribution aims to ensure balanced participation from various investor segments.
Company background and market potential
Based in Maharashtra, Godavari Biorefineries is a leading player in the production of ethanol-based chemicals in India. The company’s extensive product portfolio includes bio-based chemicals, sugar, multiple grades of ethanol, and power. These products cater to a variety of industries, such as food and beverages, pharmaceuticals, fragrances, power, fuel, personal care, and cosmetics.
The increasing demand for sustainable solutions is driving growth in the bio-based chemicals market, which was valued at $97.2 billion in 2023. According to a Frost & Sullivan report, the market is projected to expand at a compound annual growth rate (CAGR) of 10.4% from 2023 to 2028. This trend presents an appealing backdrop for investors aiming to invest in IPO opportunities with a sustainability focus.
Lead managers and investor considerations
SBI Capital Markets and Equirus Capital Markets have been appointed as the book-running lead managers for the public issue. Their role involves coordinating the issuance process and guiding potential investors.
As Godavari Biorefineries prepares to go public, investors are presented with a chance to participate in a company that not only has a diversified product line but also operates in a rapidly expanding market. The allocation of proceeds towards debt reduction further enhances its financial position, potentially making this IPO a compelling investment opportunity.
The upcoming IPO, with a reasonable price band and clear growth prospects in the sustainable chemicals space, could attract substantial interest from a variety of investor categories.
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