Varun Beverages, the leading bottler of beverage major PepsiCo, has plans to raise Rs 7,500 crore from the market through the Qualified Institutional Placement (QIP) route to fund its growth plans.
The board of the company in a meeting held on Wednesday approved the proposal for “raising of funds by way of issuance of equity shares for an aggregate amount not exceeding Rs 7,500 crore” through QIP, according to a regulatory filing by the company.
The fund would be raised in “one or more tranches” and would be ”subject to receipt of approval of equity shareholders of the company” through postal ballot, it added.
The proceeds from this fundraise would be utilised in “making investments in subsidiaries, joint ventures or associates” or to “fund the growth of existing businesses including expanding product portfolio, entering into new territories and making strategic acquisitions”.
This will also help in “Pre-payment or repayment” of debts and in general corporate purposes, Varun Beverages Ltd (VBL) said in a regulatory filing.
VBL accounts for 90 per cent of PepsiCo’s beverage sales volume in India.
VBL, which follows a January-December financial year, in 2023, reported net revenues at Rs 16,042.58 crore, up 21.8 per cent.
In the June quarter, VBL had reported a 28.3 per cent revenue growth to Rs 7,196.86 crore and its profit was up 25.5 per cent to Rs 1,261.83 crore. It has also gone for a share split of 1:5.
VBL’s association with PepsiCo is over three decades old. It is increasing the number of licensed territories and sub-territories to expand its business.
Last December, VBL announced the acquisition of South Africa-based Beverage Company (Bevco) along with its wholly-owned subsidiaries at an enterprise value of Rs 1,320 crore, which will help it expand its geographical footprint in the African market.
Bevco holds franchise rights from PepsiCo in South Africa, Lesotho and Eswatini.
Currently, VBL’s operations span six countries across the Indian sub-continent and Africa, collectively serving over 1.4 billion customers. However, 79 per cent of its revenue, a substantial part originates from its India business.
What is Qualified Institutional Placement?
Qualified Institutional Placement (QIP) is a fundraising tool used by publicly listed companies in India to raise capital. Under this mechanism, a company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into equity shares to qualified institutional buyers (QIBs).
Only institutional investors such as mutual funds, foreign institutional investors, venture capital funds, and insurance companies, among others, are allowed to participate.
QIP does not require the extensive regulatory compliance that comes with other fundraising methods like a public issue or a rights issue. It simplifies the capital-raising process.
QIPs are governed by the Securities and Exchange Board of India (SEBI), which has laid down guidelines for the minimum pricing, floor price, and lock-in periods for shares issued under QIP.
(With PTI inputs)
