RK Swamy IPO: Firm gets SEBI approval to go ahead with fundraising plans

RK Swamy IPO likely to be launched soon

Tamil Nadu-based marketing services provider RK Swamy received approval from the capital markets regulator Securities & Exchange Board of India (SEBI) to go ahead with fundraising plans via an initial public offering (IPO).

The IPO by the largest Indian majority owned integrated marketing services — provider in India, offering a single window solution for creative, media, data analytics and market research services — is a mix of a fresh issuance of shares worth Rs 215 crore, and an offer for sale (OFS) of 87 lakh equity shares by promoters and investors.

Promoters Srinivasan K Swamy and Narasimhan Krishnaswamy will be selling 17,88,093 equity shares each in the OFS, while among investors, Evanston Pioneer Fund LP will offload 44,45,714 equity shares and Prem Marketing Ventures LLP 6,78,100 shares via OFS.

The promoters hold 84.44 percent stake in the company and the rest of the stake (15.56 percent) is held by above selling shareholders.

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The SEBI has issued an observation letter to the RK Swamy IPO papers, which were filed on August 11, 2023, on January 5, 2024. In the SEBI parlance, the issuance of an observation letter means the company can launch its public issue within a year from the date of allotment of the observation letter.

RK Swamy, which was established by the late founder RK Swamy (referred to as the 'Grand Old Man of Indian Advertising' by Sam Balsara) who started RK SWAMY Advertising Associates in Chennai in 1973, claimed to be among the top 10 diversified integrated marketing communications services groups operating in India.

With a track record of over five decades, the company said it has been serving several leading companies such as Aditya Birla Sun Life AMC, Cera Sanitaryware, Dr Reddy’s Laboratories, Fujitsu General (India), Gemini Edibles and Fats India, Havells India, Hawkins Cookers, HPCL, ICICI Prudential Life Insurance Company, Mahindra & Mahindra, ONGC, Royal Enfield, Tata Play, Ultratech Cement, and Union Bank of India.

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RK Swamy intends to spend Rs 87 crore for working capital requirements, and Rs 10.98 crore for setting up a digital video content production studio. Further, Rs 33.34 crore will be used for investment in IT infrastructure development, and Rs 21.7 crore for setting up new customer experience centres and computer-aided telephonic interview centres. The remaining fresh issue money will be utilised for general corporate purposes.

On the financials front, the company has recorded a consolidated net profit of Rs 31.26 crore for the year ended March FY23, increasing from Rs 19.26 crore in the previous year. The consolidated revenue from operations during the same period jumped to Rs 292.6 crore, from Rs 234.4 crore.

SBI Capital Markets, IIFL Securities, and Motilal Oswal Investment Advisors are the merchant bankers on the issue.