TPG to cut stake at RR Kabel via IPO, poised for 4x return on investment

TPG had acquired a 21 percent stake in RR Kabel at an average acquisition price of Rs 270.08 per share in September 2018

TPG-backed RR Kabel’s IPO will allow the US-based private equity investor to cut its stake in the company from 21 percent to just 6 percent. This move has the potential to yield returns on its initial investment that are nearly four times its original capital.

TPG had acquired a 21 percent stake in RR Kabel at an average acquisition price of Rs 270.08 per share in September 2018, according to the IPO prospectus. The IPO price band is set at Rs 935-1035 per share, with the upper end of the band being nearly four times that of TPG’s initial investment.

TPG Shareholding Changes & Investment Returns:

In the current offering, TPG plans to offload its partial stake through an Offer for Sale (OFS) of approximately 11 percent from its shareholding. TPG has already sold 4.4 percent of its equity stake in RR Kabel in a pre-IPO placement for Rs 1,035 per share. After the completion of this IPO, TPG's ownership in the company will be reduced to approximately 6 percent.

It's worth noting that upon listing, TPG will be subject to a lock-in period of six months, during which, the investor won't be allowed to sell or trade remaining shares.

Also read: RR Kabel mops up Rs 585.62 crore from anchor investors ahead of IPO

More About This IPO:

RR Kabel's initial public offering will open for subscription on September 13 and will close on September 15. At the upper end of the price band, RR Kabel IPO aims to raise Rs 1,964.01 crore from the IPO.

The IPO comprises a fresh issue of equity shares worth Rs 180 crore and an offer for sale (OFS) of 1.72 crore equity shares worth Rs 1,784 crore by the promoters and investors. The OFS is led mainly by TPG, which seeks to sell 1.29 crore shares.

Also read: Madhusudan Masala IPO to open on September 18, price band set at Rs 66-70 per share