Shadowfax Technologies IPO: Logistics Solutions Provider’s Early Backers Set To Rake In Major Gains In IPO

Shadowfax IPO: The initial public offering (IPO) of logistics solutions provider Shadowfax Technologies is set to open on January 20. The company seeks to raise Rs 1,907.27 crore through the public issue, which consists of a fresh issue of 80.60 million shares amounting to Rs 1,000 crore and an offer for sale (OFS) of 73.20 million shares amounting to Rs 907.27 crore.

The price band for the public issue has been fixed at Rs 118-124. Based on the upper end of the price band of Rs 124, the valuation of the logistics firm stands at Rs 7,169 crore. Notably, the valuation at which the IPO is being conducted is lower than the Rs 8,500-9,000 crore the company originally targeted for the public issue. Despite the relatively lower valuation, the early backers of the company and other participants in the OFS are set to make gains on their investment.

Flipkart And Other Backers Set For Gains

As a part of the OFS, several initial shareholders will sell their shares. According to the company’s red herring prospectus (RHP), the early investors are likely to make paper gains between two and 10 times their original investment, provided shares of the company debut at the upper end of the price band.

Flipkart Internet, one of the early backers of the logistics solutions firm, will sell its stake for Rs 400 crore, according to the RHP. The company is likely to sell approximately 32,258,064 shares as a part of the OFS (Total sale value/upper end of the price band). Thus, the total cost of acquisition for the company’s shares is approximately Rs 144.41 crore, resulting in a total profit of Rs 258.80 crore. However, it should be noted that these are paper gains, and the actual amount the selling shareholders gain could be different.

Eight Roads Investments Mauritius II is set to sell shares as many as 158,871 shares for Rs 197 crore, according to the RHP. The acquisition cost for the shares would be approximately Rs 11.92, and the total cost of acquisition for the shares is Rs 18,93,742, resulting in a profit of Rs 178.06 crore.

International Finance Corporation is set to sell 19.637 million shares for Rs 65.549 crore, resulting in a paper profit of Rs 47.90 crore. Other selling shareholders, such as Qualcomm Asia Pacific Pte, Nokia Growth Partners IV, and NewQuest Asia Fund IV are set to make profits of Rs 52.59 crore, Rs 42.61 crore, and Rs 24.49 crore, respectively. Additionally, Mirae Asset - Naver New Growth Fund I and Mirae Asset - GS Retail New Growth Fund I are set to gain Rs 29.88 crore each from their share sale.

Based on the calculation, Eight Roads Investments is expected to gain the highest return multiple (over 10 times), as its cost of acquisition is only Rs 11.92 compared to the upper end of the price band. On the other hand, Flipkart is set to make the biggest cash exit out of all the selling shareholders with a profit of Rs 258.81 crore.

Founders of the company will not participate in the stake sale. However, the valuation of their stakes is set to increase. The shareholding of Abhishek Bansal and Vaibhav Khandelwal is set to be valued at Rs 674 crore and Rs 524 crore, respectively and those of Praharsh Chandra and Gaurav Jaithlia will be valued at Rs 71 crore and Rs 64 crore, respectively.

Shadowfax Technologies IPO Details

The logistics services provider’s public issue will remain open for subscription from January 20-22. The share allotment status is expected to be declared on January 23, and refunds will be issued to unsuccessful bidders on January 27. Shares will be credited to the demat accounts of successful bidders on the same day. The shares will make their debut on the BSE and NSE on January 28.

Shadowfax Technologies IPO GMP

Shadowfax Technologies shares are garnering strong interest in the grey market. The grey market premium (GMP) for Shadowfax Technologies shares is ranging between Rs 15 and Rs 16. Based on the grey market premium, shares of the company are expected to list at Rs 140 with a potential listing day gain of 12.9 per cent per share.

Shadowfax Technologies IPO: Registrar

ICICI Securities is the book running lead manager for the issue and KFin Technologies is the registrar.

About Shadowfax Technologies

Shadowfax Technologies provides logistics-related solutions to e-commerce companies and other value-added services. The company’s services include e-commerce and direct to customer (D2C) delivery, along with other hyperlocal and quick commerce services. The company’s network includes 4,299 touchpoints across India.