Financial Daily from THE HINDU group of publications
Thursday, Dec 09, 2004
Markets - IPOs
Money & Banking - Investment Banking
RPG Retail: Enam, SSKI, UTI in the fray to lead manage IPO
Chennai , Dec. 8
RPG Retail, which reportedly plans an initial public offer of Rs 100 crore in the first quarter of the next financial year, has three merchant bankers in the fray to secure the mandate for its IPO: Enam Financial Consultants, SSKI and UTI Securities, sources have said.
The IPO is planned for the two formats in RPG Retail, which are wholly owned by the RPG group: Spencer's hypermarket (the erstwhile Giant) and MusicWorld, its chain of music stores. The group has chalked out an aggressive expansion plan for both formats, and the funds raised will be used to fuel this.
RPG Retail has drawn up a plan for 18 Spencer's hypermarkets around the country by the end of fiscal 2006. It expects a turnover of Rs 900 crore when all stores are up and running.
The total cost of expansion will be around Rs 300 crore, the RPG Enterprises Vice-Chairman, Mr Sanjiv Goenka, had indicated earlier.
Spencer's has a turnover of Rs 150 crore as of now. MusicWorld's sales are to the tune of Rs 75 crore.
It is understood that both companies would be consolidated under one holding company which would then go public, according to the company sources.
This could either be Spencer's itself or Great Wholesale Club, which owns the hypermarket chain.
Apart from these two formats, RPG Retail owns a majority stake and runs FoodWorld Supermarkets and Health & Glow.
The Hong Kong-based Dairy Farm International has invested in these two formats along with RPG.
Spencer's has already identified property for 13 hypermarkets in cities such as Chennai, Hyderabad, Bangalore, Mumbai, Delhi, Vijaywada, Kolkata and Mangalore. Some of these cities will have more than one store.
The group has also identified cities such as Kochi, Pune, Ahmedabad, Chandigarh, Coimbatore and Nasik for the hypermarkets but the associated property is yet to be finalised. Each store would cost approximately Rs 20 crore.
RPG's total turnover from retail activities is approximately Rs 550 crore. By the end of 2004-05 it will be around Rs 750 crore.
And in two-and-a-half years from now, it will be around Rs 2,500 crore, Mr Goenka had said at a press conference in August.
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