India’s 1st ESG IPO: Fabindia Limited files DRHP for IPO: advocates sustainability in listing on stock exchanges
Promoters of Fabindia propose to gift shares
India’s first ESG IPO gets underway with Fabindia Limited (“Fabindia” or the “Company”) files DRHP with market regulator. The Offer comprises a fresh issue of up to Rs. 500 cr and an offer for sale of 25,050,543 equity shares by existing investors/ shareholders.
Why is Fabindia India’s 1st ESG IPO?
Fabindia has empowered over 50,000 artisans; approximately 64% of artisans are women, who are demonstrating a pathway to empowerment to others in their communities; 70% work from home.
The company also works with over 2,200 farmers directly and over 10,300 farmers through associates to create sustainable agricultural practices; Fabindia has taken steps to create a non-toxic farming culture by supporting farmers in getting Global Organic Certification.
Fabindia has developed a platform for artisans to be able to work from home by delivering raw material and picking up finished products from their homes.
In order to reward and express gratitude to certain artisans and farmers engaged with the Company or its Subsidiaries, certain of Fabindia’s Promoters, namely, Bimla Nanda Bissell and Madhukar Khera, pursuant to their letters each dated January 14, 2022, respectively intend to transfer 400,000 Equity Shares and 375,080 Equity Shares, respectively subsequent to the filing of this Draft Red Herring Prospectus, and either: (i) prior to filing of the Red Herring Prospectus or (ii) post the consummation of the Offer and applicable regulatory lock-in period under the SEBI ICDR Regulations, in compliance with the applicable law. If such proposed transfer (or any part thereof) is undertaken prior to filing of the Red Herring Prospectus, relevant details, including the updated shareholding of Bimla Nanda Bissell and Madhukar Khera in Fabindia shall be updated in the Red Herring Prospectus. Fabindia’s Promoters, namely, Bimla Nanda Bissell and Madhukar Khera have opened their respective demat accounts and have transferred 400,000 Equity Shares and 375,080 Equity Shares, respectively, that are proposed to be transferred by way of gift to the artisans and farmers.
Pursuant to resolution dated January 15, 2022, the Board of Directors took note of letter dated January 14, 2022 by William Nanda Bissell, one of Fabindia’s Promoters, which records his intention to transfer up to 32,200 Equity Shares by way of gift to certain acquaintances (“Donees”). Since, the relevant de-mat accounts of certain Donees is ongoing and not complete (and necessary legal formalities are yet to be completed) as on the date of this Draft Red Herring Prospectus, William Nanda Bissell proposes to transfer such Equity Shares to the Donees subsequent to the filing of this Draft Red Herring Prospectus with SEBI, provided that such transfers will be completed prior to filing of the Red Herring Prospectus, and relevant details, including the updated shareholding of William Nanda Bissell in Fabindia shall be updated in the Red Herring Prospectus.
Selling Shareholders for IPO Offer for Sale
The Promoter Selling Shareholders include Bimla Nanda Bissell, William Nanda Bissell and Madhukar Khera. While, Vijai Kumar Kapoor and Mini Kapoor are the Promoter Group Selling Shareholders. PI Opportunities Fund I and Prazim Trading and Investment Company Private Limited are the Investor Selling Shareholders. India 2020 Fund II, Limited, Bajaj Holdings and Investment Limited, Kotak India Advantage Fund – I, IFIS Corporate Advisory Services Private Limited and Entrust Family Office Legal and Trusteeship Services Private Limited are the Other Selling Shareholders.
FabIndia is a consumer lifestyle platform with an established 62-year legacy focused on authentic, sustainable and Indian traditional lifestyle products. Their brands, ‘Fabindia’ and ‘Organic India’ are well recognized brands in India, with focus on the core principles of “Celebrating India” and “Healthy Conscious Living”, respectively. The Company offers a diverse portfolio of lifestyle products to their customers across Apparel and Accessories, Home and Lifestyle, Personal Care and Organic Food categories. FabIndia’s business model is focused on sustainability by design and they have sought to create a differentiated supply-side community through a model of engaging a network of artisans (through arrangements with contract manufacturers (“Contract Manufacturers”) who, in turn, engage with such artisans) and farmers across India.
FabIndia delivers an omnichannel experience having pan-India network of 309 Fabindia stores and Experience Centers, 74 Organic India stores and a network of retail touchpoints for Organic India (including general trade stores, modern trade stores and chemists), as of September 30, 2021, and their online platforms www.fabindia.com, www.organicindia.com, mobile application, ‘Fabindia’ and third party marketplaces.
FabIndia believes in enabling and uplifting the people they work with, taking care of the environment, and being ethical in their conduct and having a long and lasting positive impact. The Company aimed to create social impact and foster economic wellbeing for artisans, communities, employees and investors, using environmentally responsible and ethical means by (i) Creating and sustaining livelihoods; (ii) Building Capacity of Artisans; and (iii) Craft Cluster Development and Livelihood Impact Programs.
The company currently works with close to 50,000 rural artisans and can replicate the model to further reach out to the wide artisanal base in the country (a total of 7 million+ artisans pan-India). FabIndia focuses on managing its impact by reducing and monitoring energy, materials, emissions, water, waste and chemicals. The company is actively exploring ways to continue improving the environmental sustainability of its operations, including by using different natural fibers to create its products, reducing the use of chemicals in the products, managing its energy and greenhouse gas emissions and reducing waste generation, among others.
The net proceeds from the IPO are proposed to be utilized for (i) Voluntary redemption of NCDs issued by the Company and the accrued interest thereon (“NCD Redemption”); (ii) Prepayment or scheduled re-payment of a portion of certain outstanding borrowings availed by the Company and the accrued interest thereon; and (iii) General corporate purposes.
ICICI Securities Limited, Credit Suisse Securities (India) Private Limited, J.P. Morgan India Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, SBI Capital Markets Limited and Equirus Capital Private Limited are the Book Running Lead Managers to the Issue.
