Go Fashion (India)-owned Go Colors has filed a draft red herring prospectus with capital market regulator SEBI to launch an IPO. The issue comprises fresh issue of shares worth Rs 125 crore and an offer for sale (OFS) of up to 1.28 crore shares by its existing shareholders and promoters. The OFS will see selling of up to 7.46 lakh shares each held by PKS Family Trust and VKS Family Trust, 75 lakh shares by Sequoia Capital India Investment, up to 33 lakh shares by India Advantage Fund S4 I and up to 5.77 lakh shares by Dynamic India Fund S4 US I.
PKS Family and VKS Family Trust hold 28.74 per cent stake, each. Sequoia Capital India Investments IV holds 28.73 per cent stake, India Advantage Fund S4 I has 12.69 per cent stake and Dynamic India Fund S4 US I holds 1.10 per cent stake in the firm. The book running lead managers to the issue are JM Financial, DAM Capital Advisors and ICICI Securities. KFin Technologies Private Ltd will be the registrar to the issue.
Upon successful completion of its IPO, Go Colors will join the likes of Page Industries, Trent Limited, Bata India, Aditya Birla Fashion and Retail Ltd, and TCNS Clothing Company Ltd. The industry P/E ratio stands at 106.35x and the weighted average return on net worth at 7.76 per cent. The net proceeds will be utilised towards funding roll out of 120 new EBOs worth Rs 33.7 crore, funding working capital requirements worth Rs 61.3 crore, and for general corporate purposes.
Go Colors reported net profit in the the financial year 2018-19 of Rs 31 crore, which increased to Rs 52.6 crore in the financial year 2019-20. However, in the covid struck previous year the company reported a net loss of Rs 3.54 crore. 75% of the entire issue of Go Colors will be reserved for qualified institutional buyers (QIB) while 15% would be kept for Non-Institutional Investors (NII). This would leave only 10% for retail investors to bid for.