Pepperfry revamps its structure for its IPO

Mumbai: Furniture retailer Pepperfry has started to review its business structure as it plans to debut on Indian exchanges.
For starters, founders Ambareesh Murty and Ashish Shah relocated Pepperfry from the Cayman Islands to Mumbai. They had registered Pepperfry in the Cayman Islands as the earlier plan was to establish a master roster in the United States. Subsequently, they changed their strategy because, according to Indian capital market regulations, a company registered abroad cannot make an initial public offering (IPO) here.
The partners are also shaping the composition of the company’s board of directors, adding independent directors, to comply with local capital market laws. The rules require that the board be composed of 33% independent directors, if its chairman is an independent director.
Pepperfry is seeking to raise up to $300 million through the sale of new shares as well as a secondary stock offering. Although the founders do not wish to divest themselves of their shares in the IPO, outside investors such as Norwest Ventures, Broad Street Investments, Bertelsmann and General Electric Pension Trust, which hold significant stakes in Pepperfry, are likely to collect part of their investments.
However, there is a cap on the amount of stake they can sell through the IPO. The rules state that a sale of shares by investors holding more than 20% of a company must not exceed 50% of their pre-issue stake, while that of shareholders holding less than 20% must not exceed 10% of their stake before the issue. holding.
Pepperfry plans to file a draft IPO prospectus with financial markets regulator Sebi this year. It has so far raised $285 million through equity and debt to fund its growth ambitions. “Pepperfry is well capitalized and on track to profitability,” said co-founder Shah. It had last raised $40 million in debt in November 2021 and managed to cut its operating losses by 60% to Rs 37 crore in FY2021. In FY2020, losses operational were Rs 95 crore.
Murty and Shah, who met while working for eBay, established Pepperfry in 2011 as a fashion and lifestyle products company before moving into furniture retail. Today, Pepperfry, with a presence of nearly 200 stores nationwide, is the largest furniture retailer. It had shipped 9.8 lakh of shipments in the 12 months ending June 2022.

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