India's First PE Firm IPO! Gaja Capital Files Paper for Groundbreaking ₹656 Cr Listing - What Investors Need to Know!

Gaja Capital, operating under the brand Gaja Alternative Asset Management, is set to create history by becoming the first private equity firm in India to go public. The company has filed its updated Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), paving the way for its Initial Public Offering (IPO).

The upcoming IPO is poised to raise a substantial ₹656 crore. This amount includes a fresh issuance of equity shares worth ₹549 crore and an offer for sale (OFS) of ₹107 crore from selling shareholders. The face value of each equity share is set at ₹5.

Funding and Future Plans

• The net proceeds from the IPO are earmarked for fulfilling sponsor commitments to various existing and new funds managed by Gaja Capital.
• A portion of the funds will also be utilized for the repayment of a bridge loan amount.
• Gaja Capital has a robust track record, managing India-focused funds and advising offshore funds that invest in India.
• The company's existing funds, Fund II, III, and IV, have capital commitments of ₹902 crore, ₹1,598 crore, and ₹1,775 crore, respectively, as of September-end.
• Based on historical trends, Fund V is proposed with a capital commitment of ₹2,500 crore, and a Secondaries Fund is planned for ₹1,250 crore.

Financial Snapshot

• For the six months ending September, Gaja Capital reported a profit after tax of ₹62 crore.
• The company achieved an impressive profit margin of 56 per cent during the same period.
• As of September-end, Gaja Capital's total net worth stood at ₹574 crore.

Pre-IPO Developments

• Prior to this IPO filing, Gaja Capital successfully raised ₹125 crore in a pre-IPO funding round.
• Investors in this round included HDFC Life, SBI Life, Volrado, and One Up, valuing the company at ₹1,625 crore, according to industry sources.
• The company also mentioned the possibility of a pre-IPO placement aggregating up to ₹110 crore before filing the Red Herring Prospectus with the Registrar of Companies (RoC).

JM Financial and IIFL Capital Services are serving as the book-running lead managers for this landmark IPO.

Impact

• This IPO is expected to open a new avenue for capital raising for private equity and alternative asset management firms in India, potentially encouraging similar listings.
• It offers investors an opportunity to gain exposure to the Indian private equity landscape through a listed entity.
• The success of this IPO could boost investor confidence in the alternative asset management sector.
• Impact Rating: 8/10

Difficult Terms Explained

• DRHP (Draft Red Herring Prospectus): A preliminary document filed with SEBI by companies planning an IPO, containing details about the company, its financials, risks, and the proposed use of funds. It is subject to SEBI's review and approval.
• SEBI (Securities and Exchange Board of India): The primary regulator of the securities market in India.
• IPO (Initial Public Offering): The process by which a private company first offers its shares to the public, becoming a publicly traded company.
• Private Equity (PE): Investment funds that invest in companies not listed on public stock exchanges.
• Alternative Asset Management: The management of investment funds that invest in non-traditional asset classes like private equity, hedge funds, real estate, and commodities.
• Offer for Sale (OFS): A mechanism where existing shareholders of a company sell their shares to new investors during an IPO.
• Book Running Lead Managers (BRLMs): Investment banks that manage the IPO process, including marketing the issue to investors and ensuring regulatory compliance.