SAIF Partners-Backed Senco Gold Scraps IPO

Jewellery retailer Senco Gold Ltd has withdrawn its proposed initial share sale, deferring its plan to go public for a second time in a little over two years.

The Kolkata-based company informed the Securities and Exchange Board of India its decision to shelve the IPO plan last week, the capital markets regulator’s website shows.

Senco called off its IPO plan due to weak market conditions, two people in the know told VCCircle.

“Feedback from investors has been poor owing to the problems in the jewellery sector. Investors with whom the company and bankers spoke with remain concerned about the credibility of jewellery firms’ operations after India’s biggest bank fraud last year,” one of the persons said on the condition of anonymity. The person clarified that Senco did not face any regulatory issues either from SEBI or the Reserve Bank of India.

Nirav Modi, a billionaire jeweller, along with his uncle Mehul Choksi defrauded Indian state-run lender Punjab National Bank of over $2 billion by raising credit from overseas branches of other Indian banks using illegal guarantees for several years. Choksi, who owns Gitanjali Gems Ltd, and Modi fled India last June. Modi was spotted in London two days ago and is seeking political asylum, media reports said.

PC Jeweller, which went public in December 2012, had faced allegations that it withheld its business relationship with e-governance service provider Vakrangee, which was under SEBI investigation for alleged manipulation of its share price. In addition, PC Jeweller’s founder PC Gupta gifted some shares to family members through off-market transactions that raised questions over governance standards.

“Jewellery companies are getting a bad name. The investment sentiment for such firms is dull. Hence, Senco, its PE investor, and merchant bankers together decided to withdraw the IPO plan,” said the second person cited above.

Senco had filed its draft red herring prospectus for the IPO in August last year. The IPO was to be entirely a fresh issue of shares worth Rs 600 crore. Its venture capital investor SAIF Partners hadn’t proposed to sell any shares.

The company had earlier planned to go public during the financial year that ended in March 2018, according to media reports in 2016. However, VCCircle reported in December 2016 that the company had deferred its plan.

Email queries sent to the company, SAIF Partners and merchant bankers didn’t immediately yield any response.

Senco competes with the likes of PC Jeweller and Kerala-based Kalyan Jewellers in the gold segment and Tata Group’s Tanishq in the jewellery category. Founded in 1945, Senco has 93 showrooms in 72 cities and towns.

Senco joins two other firms who called off IPO plans in the past year. VCCircle reported last December that financial services group Anand Rathi shelved plans to list its wealth management arm owing to “difficult market conditions”.

CPPIB-backed ReNew Power also withdrew its plans to go public. The company had filed its draft proposal on 8 May for an estimated IPO of Rs 7,000-7,500 crore ($1.04-1.11 billion) and had received SEBI nod in July 2018.

Courtesy: VC Circle