Mumbai: One of the leading dairy companies in South India, Dodla Dairy is planning to come up with a Rs 500 crore initial public offering (IPO). As per the available information investment banks, Edelweiss and ICICI Securities have been hired to run the process by the dairy which has been valued at Rs. 3,000 crore.
The existing investor – Rise Fund, managed by US-based PE fund TPG Growth might take a partial exit through this IPO. As of now, 25 per cent stakes in Dodla are held by Rise Fund.
Sunil Reddy, a first generation entrepreneur, started Dodla Dairy in 1998. As of now, the dairy sells around 11 lakh litres of milk and 6 tonnes of milk products in a day. It posted the revenue of Rs. 1,413 crore in the year 2016-17. In Telangana, Andhra Pradesh and Karnataka, the dairy has 11 milk processing and packaging plants, as well as it also carries out procurement, processing and packaging of milk and milk products in four states and sale of those in nine states.
As per the sources aware of the development, the preliminary draft red herring prospectus for the IPO is likely to be filed in a couple of months and Rise Fund might dilute 10-12 per cent stakes.
A part of the issue will be in new shares and the Hyderabad-headquartered company plans to utilize the proceeds to set up more units and for global expansions. It is aiming for opportunities in global markets like Europe and Africa through multiple buyouts, the source added.
In South India, Dodla competes with dairies such as Hatsun Agro, Tirumala Milk Products, Vijaya, Jersey, Mother Dairy, Heritage, Creamline Dairy and Nandini Milk, which is part of the Karnataka Cooperative Milk Producers’ Federation.
In May last year, Rise Fund acquired the 25 per cent stake it holds in Dodla from US-based investment firm Proterra Investment Partners for $50 million. This was the first investment in India by the TPG Growth-backed fund which counts Elevar Equity and the Bridgespan Group as its other investors.
Private equity funds have been tapping the growth potential in the dairy business in India through multiple investments.
India, the world’s largest producer of milk, had an output of 165 million tonnes in 2016-17. According to the National Dairy Development Board, demand for milk is expected to grow to 200 million tonnes in 2022 from 138 million tonnes in 2014, at a compound annual growth rate of 5 per cent.