TVS Supply Chain Solutions Ltd IPO - 7 things to know

TVS Supply Chain Solutions Ltd, a company focussed on supply chain and logistics solutions, had filed its draft red herring prospectus (DRHP) in mid-February 2022 and SEBI is yet to give its observations and approval for the IPO.

Normally, the IPOs are approved by SEBI within a period of 2 to 3 months unless there are other queries or clarifications that the regulator has. The approval for the TVS Supply Chain Solutions IPO is expected to come in by late April on in May 2022.

The IPO of TVS Supply Chain Solutions Ltd will be a combination of a fresh issue and an offer for sale but the next step will be for the company to finalize on its issue date and issue price post the SEBI approval of DRHP comes in.
 

7 important things to know about the TVS Supply Chain Solutions Ltd IPO

1) TVS Supply Chain Solutions Ltd has filed for an IPO with SEBI and is currently awaiting SEBI approval to go ahead with the IPO. The TVS Supply Chain Solutions IPO comprises of a fresh issue of Rs.2,000 crore and an offer for sale of 595 lakh shares.

However, since the price band and the granular details like the number of shares offered are not available, we will have to wait for the price band details before we get the final IPO size. The company has only a rupee break-up of the size of the fresh issue and offer for sale in terms of number of shares.

Based on the market estimates, the total IPO size including the fresh issue and the OFS component would be closer to Rs.5,000 crore.

2) Let us talk about the offer for sale (OFS) portion of the IPO first. A total of 595 lakh shares will be sold by the early investors and promoters of the company as part of the offer for sale. The OFS component will not result in any fresh fund infusion or dilution of the capital or the EPS.

However, the selling of stake by the promoter will increase the free float of the company and facilitate listing of the stock. The main sellers in the 595 lakh shares OFS include TVS Mobility, Omega TC Holdings Pte Ltd, Mahogany Singapore Pte Ltd, Tata Capital Financial Services and DRSR logistics Services.

3) The fresh issue portion of Rs.2,000 crore will issue fresh shares in the quantum based on the total price of the offer as decided. Let us not look at how the funds raised via fresh issue will be utilized by TVS Supply Chain Solutions.
 

It will use the funds predominantly to repay debt of the company to the tune of Rs.1,162 crore. In addition, the company has allocated Rs.75.2 crore to capitalize its strategically key subsidiaries based out of the US, Thailand and Germany.

Another Rs.60 crore will be infused into its UK based Rico arm to take its stake in the subsidiary to 100%.

4) The company is also planning a pre-IPO placement, although the amount is yet to be decided. The pre-IPO placement is normally done on a private placement basis to HNIs, family offices and qualified institutional buyers or QIBs.

The pre-IPO placement, unlike the anchor placement, has greater leeway in pricing the placement but comes with a longer lock-in period. If the pre-IPO placement of shares is successful, TVS Supply Chain Solutions will reduce the size of the IPO proportionately.

5) TVS Supply Chain Solutions (TVS SCS) is an integrated supply chain and logistics solutions provider to Indian industry and also operates globally. It is currently present in over 25 countries across the world and has serviced more than 60 of the Fortune 500 companies in the world.

TVS Supply Chain Solutions was originally promoted by the TVS Group and is now part of the TVS Mobility Group. The mobility group of TVS has 4 business verticals viz. supply chain solutions, manufacturing, auto dealership and post-market sales and service.

6) TVS Supply Chain Solutions, which is one of India’s leading supply chain logistics solution provider, has a long and sterling track record of inorganic growth. It has consistently grown through mergers and acquisitions and successfully integrating them.

TVS Supply Chain Solutions has acquired and integrated over 20 acquisitions in last 15 years. The inorganic lateral strategy is used to acquire customer base, geographical reach and niche technological capability.

7) The IPO of TVS Supply Chain Solutions Ltd will be lead managed by JM Financial, Axis Capital, JP Morgan India, BNP Paribas, Edelweiss Financial Services and Equirus Capital. They will act as the book running lead managers or BRLMs to the issue. The stock will be listed on BSE and NSE.

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