BILT Paper Plc, part of the $4-billion Avantha Group, on Tuesday announced that it plans to raise around $330 million (Rs 1,480 crore) through an Initial Public Offer (IPO) of its shares on the London Stock Exchange (LSE).
The funds raised will be used to fund expansion plans, and to pay back debt. BILT will use around $170 million to fund its expansion plans including development of enlarged pulp mill facilities and capacity expansion of its two existing paper production facilities.
Close to $140 million would be utilised to pay back debt.
"Indian paper demand is expected to increase significantly throughout the next decade," R.R. Vederah, chairman of BILT said in a statement. "This growth in demand has already led us to significantly expand our production since 2008… the proceeds from the listing will help us to meet (it)."
At present Ballarpur Industries, which is part of the Avantha group, owns 79.5% stake in BILT Paper while the rest is held by private equity (PE) investors JP Morgan Mauritius and Lathe investment.
The company did not specify the number of shares on offer and only said the two PE firms may sell a portion of their holdings for the offer.
BILT chief executive Yogesh Agarwal said the firm, which has operations in India and Malaysia, had taken wider conditions into account while going ahead with its offering.
"If you look at ... the relationships our business has got with what is happening, we thought it would have a minimal impact on us and we could go ahead with our IPO," he told reporters on a conference call.
Agarwal added that listing in London rather than on the Bombay Stock Exchange like its parent company, Ballarpur Industries, would allow it to access a new set of investors who understand the opportunities in India.
Citigroup and JP Morgan are joint global coordinators and joint book-runners of the initial public offering.