Subhiksha to list through acquisition of Chennai-based Blue Green
01 Jul 2008
Mumbai: Discount food and grocery retailer Subhiksha has picked up a majority stake in Chennai-based Blue Green Constructions and Investments Ltd. The two firms are expected to merge and list the combined entity shortly.
In a statement, Subhiksha said that the boards of the two companies will meet this week to discuss a merger, and the merged entity, Subhiksha Ltd, could list on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Blue Green is presently listed on the local Chennai exchange.
Subhiksha founder R Subramanian said the transaction would ensure Subhiksha's access to capital and continued growth. The retail chain sells mobile handsets, and has plans to foray into consumer durables.
Subramanian said the chain would have around 2 million square feet of retail space by next year.
The retail chain is targetting of 3,000 stores by 2010, for which it plans to invest around Rs1,200 crore, said Subramanian, while explaining that the funding would be raised via a mix of debt and equity.
Currently, Subhiksha has around 1,480 stores, and plans to have a presence in around 250 cities by 2010.
Subramanian said Subhiksha had taken over 40 per cent of Blue Green, which has a paid-up capital of Rs5 crore, and the acquisition was done at par. 67 per cent of Blue Green's paid-up capital is held by its promoters, with the balance being held by the public. Subhiksha will make an open offer to the public to acquire another 20 per cent of the company, as per the guidelines of the Securities and Exchange Board (SEBI) of India.
Sources say the 'reverse merger' is a way to list Subhiksha while avoiding an IPO, and is also a great opportunity for investors to exit, if they would like to. Subramanian and the other promoters of Subhiksha hold 60 per cent of the company, with ICICI Ventures holding around 23 per cent, and other institutions 15 per cent. Two per cent of the company is with its he employees under an employee stock option plan (ESOP).
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