Private equity funds Matrix Partners and FC advisors (Mauritius) Ltd hold more than promoters Geeta and Rajesh Bhatia in the IPO-bound Tree house Education and Accessories Ltd.
The two funds, along with another Mauritius-based entity, hold a majority stake with over 50 per cent in the pre-issue share capital of the company.
Typically, PE funds have shied away from making control transactions due to Indian regulations which require a designated promoter at the time of an Initial Public Offer. Many PE funds do not want to take the mantle of a promoter and compliance and other responsibilities that come with it. This has kept the control transactions low in the Indian PE space. Even if PEs take control, not many have come to the IPO market, making the Tree House IPO a rare event.
Nishesh Dalal, associate director- private equity group, Ernst & Young said: “Generally, you have PE funds holding a minority stake. But some funds like to take control, you see them holding over 50 per cent. You will see a similar situation when these companies come for IPOs. But not many companies where PEs hold control have come for an IPO.”
While Matrix partners holds 35.64 per cent, FC Advisors has 11.46 per cent and ON Mauritius 3.52 per cent, taking their total holding to 50.6 per cent. The promoters hold 39.28 per cent. Matrix and FC is part of the company board. The company plans to sell little over 8.4 million shares at Rs 135- 153, divesting 25.01 per cent in the company. At the upper end of the price band, the company would be raising around Rs 128 crore. Tree House had raised a pre-IPO funding of Rs 19 crore, led by ON Mauritius (a subsidiary of Omidyar Network) at Rs 150 a share in May.