Varun Beverages board gives nod to Rs 7,500 crore QIP

Varun Beverages, the leading bottler of beverage major PepsiCo, has plans to raise Rs 7,500 crore from the market through the Qualified Institutions Placement (QIP) route to fund its growth plans. The board of the company in a meeting held on Wednesday approved the proposal for "raising of Capital through QIP for an amount not exceeding Rs 7,500 crore", according to a regulatory filing by the company.

Varun Beverages Ltd (VBL), part of RJ Corp, "to implement its growth plans and to strengthen its balance sheet, intends to raise capital through QIP and inter alia utilise the proceeds from this fundraise," it added.

The fund of Rs 7,500 crore would be raised in "one or more tranches" and would be "subject to receipt of approval of equity shareholders of the company", it added.

The proceeds from this fundraising would be utilised in "making investments in subsidiaries, joint ventures or associates" or to "fund the growth of existing businesses including expanding product portfolio, entering into new territories and making strategic acquisitions".

This will also help in "pre-payment or repayment" of debts and in general corporate purposes, VBL said in a regulatory filing.

For this, VBL proposes to issue equity shares of the face value of Rs 2 each under QIP to institutional buyers to raise Rs 7,500 crore at a price including a premium. A minimum of 10 per cent of the shares under QIP would be allotted to mutual funds.

Currently promoters Jaipuria family holds a 62.66 per cent in the company.

Shares of VBL on Wednesday settled at Rs 592.50 on BSE, up 0.44 per cent.

Its 52-week high was at Rs 682.84 on July 29, 2024, and 52-week low was at Rs 331.28 on October 26, 2023. In September 2024, the company announced stock split in the ratio of 2:5.

Earlier in its annual report VBL had said it is expanding its production capacities in the juice and value-added dairy product segments in 2024.

Besides, VBL is also strengthening its distribution network and chilling infrastructure, which is essential to enhance presence in the existing and under-penetrated markets, it had said.

Promoted by Jaipuria family, VBL accounts for 90 per cent of PepsiCo's beverage sales volume in India.

VBL's association with PepsiCo is over three decades old. It is increasing the number of licensed territories and sub-territories to expand its business.

Last December, VBL announced the acquisition of South Africa-based Beverage Company (Bevco) along with its wholly-owned subsidiaries at an enterprise value of Rs 1,320 crore, which will help it expand its geographical footprint in the African market.

Bevco holds franchise rights from PepsiCo in South Africa, Lesotho and Eswatini.

Currently, VBL's operations span six countries across the Indian sub-continent and Africa, collectively serving over 1.4 billion customers. However, 80 per cent of its revenue originates from its India business.

VBL, which follows the calendar as a financial year, had in 2023, its net revenues at Rs 16,042.58 crore, up 21.8 per cent.

In the latest June quarter VBL had reported a 28.3 per cent revenue growth to Rs 7,196.86 crore and its profit was up 25.5 per cent to Rs 1,261.83 crore.