Bharat FIH, a Foxconn Technology Group company, has received approval from capital market regulator SEBI to launch Rs 5,000 crore initial public offering (IPO). The public issue comprises fresh issue of shares worth Rs 2,502 crore and an offer-for-sale of up to Rs 2,502 crore by promoter group and Foxconn unit Wonderful Stars. The company had filed draft red herring prospectus with capital market regulator in December 2021. Bharat FIH provides manufacturing and assembly services for Xiaomi’s mobile phones in India.
The book running lead managers to the issue are Kotak Mahindra Capital Company, Citigroup Global Markets India, BNP Paribas, and HSBC Securities and Capital Markets (India). While the registrar to the issue is KFin Technologies.
iPhone maker Foxconn’s India unit will have a 75% reservation for Qualified Institutional Buyers (QIB) while 15% of the portion will be reserved for Non-institutional Investors (NII). This would leave only 10% of the entire issue for retail investors. Upon succesful listing on BSE and NSE, Bharat FIH will join the likes of Dixon Technologies (India), and Amber Enterprises India. The average industry peer group P/E ratio stood at 168.82x, according to DRHP.
Bharat FIH has planned to use the funds raised through the fresh issue to fund capital expenditure requirements of the company towards upgradation and expansion of their existing campuses. The company also plans to invest in their subsidiary RSHTPL, for financing its capital expenditure requirements, and funding working capital requirements. The company, in its DRHP, said that it derives most of its revenue from Xiaomi, a mobile phone OEM based in China.
DRHP noted that companies like Bharat FIH, Flextronics and Dixon have already started EMS for some leading companies like Xiaomi, Apple, Motorola, Lenovo and others. Local EMS capabilities in terms of product assembly, packaging and some companies like Dixon offering reverse logistics for mobile phones is an attractive proposition for OEMs to consider EMS/ODM for local assembly. Increasing logistics and raw material costs raises production costs which affects OEMs. This will lead OEMs to turn to EMS/ODM providers, which offers complete end-to-end solution.