Rabobank-backed Prabhat Dairy extends IPO and cuts price

The Indian dairy products company, which is owned by PE firms and development finance institutions, has extended its IPO and cut the price of its shares after struggling to attract investors.

Private equity-owned Prabhat Dairy, an Indian milk and dairy products company, has extended its IPO and cut the price of its shares after struggling to attract investor interest.

Backed by Rabo Equity India’s India Agribusiness Fund, Prabhat Dairy’s IPO has been hit by the equity market turmoil which followed China’s stock market slump.

The IPO was just 36 percent subscribed, according to the Bombay Stock Exchange, with secondary market volatility particularly pronounced and affecting demand for the offer. Prabhat had also not managed to secure any cornerstone investors ahead of the public launch.

The company has extended its IPO until 4 September, having initially planned a 1 September close, and is offering a substantial discount on the initial offer, cutting the price band of the issue from 140-147 rupees ($2.11 – $2.22; €1.88 – €1.97) to 115-126 rupees.

The company announced its plans to float in April this year and launched the offer on 28 August. The IPO comprises fresh share issuance of 3 billion rupees  in addition to the sale of the 14.7 million shares held by its existing owners, of which Rabo Equity India’s India Agribusiness Fund is the largest, holding 6.58 million shares. Rabo Equity India is 51 percent owned by Dutch financial services group Rabobank.

Other investors in Prabhat include the French development finance institution Proparco.

Rabo India Agribusiness is in the process of raising its second fund, which has a $200 million target, following the full deployment of its first fund, a $120 million vehicle. In December last year, a spokeswoman for the fund told Agri Investor it had raised $80 million. It is due to announce a final close before the end of this year.

UK development finance institution CDC has committed $30m to the fund. Other investors so far include parent company Rabobank, which also committed $30 million, Dutch development finance institution (DFI) FMO, and Danish DFI IFU, which both committed $10 million each. Rabo, CDC and FMO are repeat investors from Fund I.