Initial public offering (IPO)-bound defence and aerospace component manufacturer Data Patterns (India) Ltd has raised a pre-IPO round led by Axis Mutual Fund, White Oak Capital and IIFL Mutual Fund, said two people aware of the development, seeking anonymity.
The company has raised around ₹60 crore in the round at a valuation of ₹2,700 crore, one of the people mentioned above said.
“The company will soon file its red herring prospectus with the registrar of companies, most likely by the end of this week and will look to launch its IPO by mid-December. The IPO pricing could be similar to the pre-IPO placement or at a slight premium, though it is yet to be finalized,” he said.
Companies from India’s defence sector have seen strong demand from investors who are betting on Prime Minister Narendra Modi’s mega push to increase domestic manufacturing under the Atmanirbhar Bharat and Make In India programmes.
The government has announced several production-linked incentive schemes across sectors, such as defence, auto component, pharma and electronic appliances, to boost India’s image as a global manufacturing destination.
Recent IPOs in the defence space, such as MTAR Technologies in March and Paras Defence and Space Technologies in September, saw massive subscription numbers and went on to deliver strong listing-day gains to investors. Both the stocks are trading 3.5-4 times above their IPO price.
Data Patterns is backed by Mathew Cyriac, the former co-head of Blackstone India Private Equity, who is also an investor in MTAR Technologies. Cyriac’s investment in Data Patterns followed the successful IPO of MTAR Technologies. His investment firm, Florintree, owns a 12.8% stake in the company.
Chennai-based Data Patterns is a homegrown defence and aerospace electronics systems company that develops systems for land, sea, air and space platforms. The company was established in 1985 by S. Rangarajan. His wife, Rekha Rangarajan, is a co-promoter. Data Patterns has a workforce of more than 700.
“India’s defence capital expenditure is more than ₹1 trillion and has been growing at a steady pace over the years. There is increased participation from the private sector in the defence supply chain as a result of government policies such as the defence offset programme, Make in India initiative, and policy changes in the defence procurement procedure (DPP), which is oriented towards procuring from Indian industry, indigenous development and Indian strategic partners to build large systems and platforms in India,” said the second person mentioned above.
Data Patterns had filed its draft papers in September to raise ₹600 crore- ₹700 crore. The public issue comprises a fresh fundraise of ₹300 crore and an offer for sale of more than 6 million shares by promoters and some individual shareholders.
The company intends to use the capital raised from the initial share sale towards the repayment of debt, as working capital, and to upgrade and expand its existing facilities. Besides , the funds will also be used for the company’s general corporate purposes.
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