Chemplast Sanmar, Tatva Chintan Pharma Chem get Sebi's go ahead for IPOs

Chemplast Sanmar and Tatva Chintan Pharma Chem have received capital markets regulator Sebi's go ahead to raise Rs 3,950 crore collectively through initial share sales.

Chennai-based Chemplast Sanmar filed preliminary IPO papers in May to raise Rs 3,500 crore, while specialty chemical manufacturing company Tatva Chintan Pharma Chem approached Sebi with its draft papers in April to garner Rs 450 crore through its initial public offering (IPO).

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Chemplast Sanmar and Tatva Chintan Pharma Chem obtained Sebi's observations on July 2 and June 30 respectively, an update with Sebi showed on Monday.

Sebi's observations are necessary for any company to launch public issues like IPO, follow on public offer (FPO) and rights issue.

Going by the draft papers, Chemplast Sanmar's Rs 3,500 crore IPO comprises fresh issue of equity shares worth Rs 1,500 crore and an offer for sale of Rs 2,000 crore.

The offer for sale comprises sale of shares worth Rs 1,850 crore by Sanmar Holdings Ltd and Rs 150 crore by Sanmar Engineering Services Ltd.

Chemplast Sanmar is a leading specialty chemicals manufacturer with focus on specialty paste PVC (polyvinyl chloride) resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors.

The company would utilise an aggregate amount of Rs 1,238.25 crore from the net proceeds towards early redemption of the non-convertible debentures (NCDs) issued by it. The funds will also be used for general corporate purposes.

"The early redemption of the NCDs in full will help reduce our outstanding in indebtedness and debt servicing costs, assist us in maintaining a favourable debt to equity ratio and enable utilisation of our internal accruals for further investment in business growth and expansion," the draft papers noted.

"In addition, we believe that our improved leverage ratio, consequent to such redemption of NCDs, will improve our ability to raise debt in the future to fund potential business development opportunities and plans," it added.

ICICI Securities, Axis Capital, Credit Suisse Securities (India) Private Ltd, IIFL Securities, Ambit, BOB Capital Markets, HDFC Bank, IndusInd Bank and Yes Securities are the merchant bankers to the issue.

Tatva Chintan Pharma Chem's IPO consists of fresh issuance of equity shares worth Rs 225 crore and an offer of sale to the tune of Rs 225 crore by existing promoters and shareholders, as per the draft red herring prospectus (DRHP).

Proceeds from the fresh issue would be used towards funding capital expenditure requirements for expansion of the company's Dahej manufacturing facility; upgradation of R&D facility in Vadodara; and general corporate purposes.

Vadodara-based Tatva Chintan is a specialty chemical manufacturing company. It exports most of its products to over 25 countries, including the US, China, Germany, Japan, South Africa and the UK.

ICICI Securities and JM Financial book running lead managers to the issue.

The equity shares of the two companies will be listed on NSE and BSE.