Mumbai: Furniture retailer Pepperfry has started to overhaul its business structure as it plans to debut on India’s stock exchanges.
First off, 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 primary listing in the US. They then changed their strategy as a foreign registered company cannot conduct an initial public offering (IPO) here under Indian capital market regulations.
The partners also shape the composition of the company’s board of directors, using independent directors to comply with local capital markets laws. The rules require the board to be 33% independent directors if its chairman is an independent director.
Pepperfry aims to raise up to $300 million through the sale of new shares as well as through a secondary offering of shares. While the founders don’t want to sell their shares in the IPO, outside investors such as Norwest Ventures, Broad Street Investments, Bertelsmann and General Electric Pension Trust, which hold large stakes in Pepperfry, are likely to redeem some of their investments.
However, there is a cap on the amount of shares they can sell through the IPO. The rules state that a sale of shares by investors who own more than 20% in a company should not exceed 50% of their pre-issuance stake, while sales of shares holding less than 20% should exceed 10% of their stake before the emission should not exceed hold.
Pepperfry plans to submit a draft prospectus for the IPO to the capital market regulator Sebi later this year. To date, the company has 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. The company last borrowed US$40 million in November 2021 and managed to cut its operating losses by 60% to Rs.37 billion in fiscal 2021. In FY 2020, operating losses were Rs. 95 crore.
Murty and Shah, who met while working at eBay, founded Pepperfry in 2011 as a provider of fashion and lifestyle products before moving into furniture retail. Today Pepperfry is the largest furniture retailer with a presence of almost 200 stores in the country. In the 12 months ended June 2022, 9.8 lakh shipments were sent.
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