India’s Prabhat Dairy, which is backed by Rabobank-sponsored India Agribusiness Fund, is looking to raise between US$80 million and US$96 million through an initial public offering (IPO). The funds from the float will be used to expand the company’s offerings to include value-added products.
The firm has reportedly hired a domestic investment bank for the IPO, but is looking to hire additional bankers.
Founded in 1998, Prabhat produces ghee, flavored milk, sweetened condensed milk, skim milk powder, and packaged milk. The firm posted profits of US$8.5 million for fiscal year 2014 – up from profits of US$4.7 million in 2013 according to the Registrar of Companies.
Data compiled by the National Sample Survey Office indicates that monthly per capita expenditure on milk and milk products in urban India has more than doubled between 2001 and 2012, and demand for milk in India is expected to see a compounded annual growth rate of 5%, increasing from 138 million tons in 2014 to 200 million tons in 2022.
The addition of higher-margin, value added products is strongly driving growth in the Indian industry – the share of value added products within the milk and milk derivatives segment in the country is seeing a CAGR of 25%, which is expected to continue to 2019/20 according to a June 2014 report by CARE Ratings.
Several Indian dairy firms are looking toward floats, including Parag Milk Foods Pvt, which is seeking to raise US$96 million through its own IPO. Historically, once a firm has reached revenues of between US$112 and US$128 million, the necessary scale has been reached and institutional investor awareness has been met to launch a successful float in the country according to advisory firm, Alvarez & Marsal India Pvt Ltd.
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