BVG India Ltd, the country’s largest pure-play facility management player, is likely to file a draft red herring prospectus (DRHP) with market regulator SEBI this month for a proposed initial public offering, sources with knowledge of the matter told Moneycontrol.
The Bharat Vikas Group company, which is backed by UK private equity major 3i Group, plans to raise between Rs 1,100 crore and Rs 1,300 crore through the proposed listing, the sources added.
Pune-based BVG India competes with the likes of SIS, Quess Corp, Sodexo India and Team Lease Service, and counts Indian Railways, Rashtrapati Bhavan, the Tata Group , Hindustan Unilever and Accenture among its clients.
“ICICI Securities and JM Financial are amongst the investment banks working on the IPO which is intended to be a mixture of primary and secondary issue of shares. The plan is to file the documents with Sebi before the end of September,” one of the sources told Moneycontrol.
“The planned listing will provide a partial exit to 3i Group & also facilitate debt repayment and general corporate purposes,” added the second source.
3i, an international investor in private equity, infrastructure and debt management, picked up a minority stake of around 27 percent in BVG India from earlier investor Kotak Private Equity Group in March 2011.
“Demo(netisation), GST and COVID-19 have played spoilsport earlier, but the curve is expected to flatten in the facility management space. There has been a shift from unorganised to organised and people will prefer more formal players in the COVID-19 scenario,” the third source said.
All three sources spoke to Moneycontrol on condition of anonymity.
BVG India has managed to maintain high EBIDTA margins of around 14 percent, which gives the firm an edge over its peers, he added.
ICICI Securities and 3i Group declined to comment in response to an email query. Moneycontrol is awaiting an email response from BVG India and has sent multiple reminders for the same. An email query to JM Financial remained unanswered. This article will be updated as soon as we hear from both the firms
BVG India is an integrated services player and provides total facility management services along with mechanised housekeeping, landscaping and gardening, logistics and transportation, solid waste management, sewage treatment and civil and electrical services. It also provides emergency ambulance services. Its FY20 annual revenues were around Rs 2,000 crores.
The firm started in 1997 as a housekeeping company with 8 people and a single client. It is now India’s largest integrated services company employing over 7,5000 people, serving more than 850 customers in 70 cities across 22 states, according to its website.
Listed peers SIS, Team Lease Services and Quess Corp operate in the facility management services segment and also deal with HR services, technology solutions , security and cash logistics. In the last three months, the SIS stock has seen a dip, but the share prices of Team Lease and Quess Corp have surged sharply. In 2016, ICICI Ventures TeamLease Services Ltd and Fairfax Financial Holdings-funded Quess Corp Ltd raised Rs 420 crore and Rs 400 crore from their respective IPOs. SIS got listed in the following year.
According to global market research firm Technavio, the facility management services market in India is poised to grow by $14.98 billion during 2018-2022 at a CAGR of almost 18% during the forecast period.