Closely-held retail chain major Subhiksha has quietly crafted a strategy to become a listed entity even as a volatile stock market is upsetting the plans of many companies wanting to go public.
Subhiksha, India’s largest food and grocery discount retailer, announced it is acquiring a majority stake in a Chennai-based listed company, Blue Green Constructions and Investments. The company said that the boards of the two companies will meet on Monday to consider a merger. The merged entity will be called Subhiksha Limited and is expected to list its shares on NSE/BSE apart from MSE where Blue Green’s shares are currently listed.
Blue Green is a non- banking finance company promoted in the early nineties when the sector was booming. It is almost a shell company with its shares listed in MSE not actively traded. Subhiksha promoter R Subramanian said: “The acquisition will not cost us much and comes to Rs 2.5 crore without any liability. Blue Green has a paid up capital of Rs 5 crore and we will pay 50% to get majority stake. Its promoters, hailing from south Tamil Nadu, had plans to launch consumer durable stores. They had identified properties. But, it did not materialise as they could not raise funds”. By this deal, Subhiksha will be able to expand its operations including in the durable format. Post listing of shares, its valuation in terms of market cap is expected to be Rs 4,000 crore. It is said the listing will also help the private investors, who have substantially invested in Subhiksha, to have an exit route.Apart from food & grocery, Subhiksha is also a prominent player in mobile retailing. Subhiksha is also said to be planning to raise Rs 400-500 crore from the capital market in 6-8 months.According to media reports, the company is expected to tap the markets either this year or early next year.
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