Danish brewer Carlsberg A/S is reportedly moving ahead with plans to take its India business public and could file draft IPO papers as early as this month, Bloomberg News reported, citing people familiar with the matter.
The proposed offering could raise as much as $700 million through the listing of its Indian unit, the news report said. It also noted that the company is working with Kotak Mahindra Capital Co. and the local units of JPMorgan Chase & Co. and Citigroup Inc. on the proposed share sale.
IPO plans still under discussion
The initial public offering () is expected to consist of a secondary share sale by the Danish brewer, the sources told Bloomberg News. While no official timeline has been announced yet, the public issue could be launched later this year if the said plans move forward.
Meanwhile, deliberations are ongoing and details including the size, structure and timing of the transaction could still change.
Representatives for told the news agency that it is evaluating options to increase shareholder value, including an IPO, but stressed that no final decision has been taken at this stage. The banks who are reportedly involved in the process also did not comment on the matter.
Carlsberg isn’t the only alcohol major eyeing an India IPO
India has emerged as a key growth market for global alcohol companies, which is why several multinational players are increasingly exploring ways to unlock value from their Indian operations. They are majorly betting on rising consumption in one of the world’s fastest-growing major economies.
Carlsberg is not alone in considering a public listing. French spirits maker Pernod Ricard SA, known for brands such as Absolut vodka and Chivas Regal Scotch whisky, has also been exploring a potential listing of its India business and has reportedly hired advisers to assist with the process, the news agency said.
Carlsberg India’s market share in the industry
Carlsberg India is the country’s second-largest brewer, with a market share of about 22%, according to a company presentation. The company was established in India in 2007 and now it operates14 breweries across the country, which includes eight company-owned facilities and six contract manufacturing units, according to information on its website.
The company’s closest listed peer, United Breweries Ltd., has a market value of about $3.6 billion. Its shares have declined roughly 36% over the past year, compared with a 8% drop in India’s benchmark Nifty 50 Index.
Rising costs add pressure on alcohol makers
The push to unlock value through public listings comes at a time when alcohol manufacturers are grappling with higher input costs. According to a report by news agency PTI, makers have sought a reasonable price hike from state governments to offset pressures arising from elevated can and bottle costs due to supply chain disruptions triggered by the West Asia crisis.
Confederation of Indian Alcoholic Beverage Companies (CIABC) and the Brewers Association of India (BAI) have urged states to permit price hikes for IMFL (Indian made foreign liquor), wine and beer products, while also seeking interim relief measures. The BAI had specifically asked for a 15-20% increase in prices to help suppliers partially absorb the impact of rising input costs.
(with wire inputs)