Campus Activewear IPO - 7 Things to Know
Campus Activewear Ltd, was established in 1983 by H K Agarwal under the brand name of Action Footwear. It was only in 1997 that the Campus Activewear brand was launched to cater to the young and sporty crowd. In India, Campus is the second largest player in the mass market with a market share of 15-20%. The industry leader, Reebok, has a market share of 45%.
7 Important Things to Know About Campus Activewear IPO
1) Campus Activewear Ltd has filed for a Rs.1,800 crore IPO with SEBI which comprises entirely of an offer for sale of Rs.1,800 crore. There will be no fresh issue component in the IPO so the entire Campus Activewear IPO will only entail a transfer of ownership and there will be no impact on the equity size of the company and there will be no fresh fund inflow.
2) The company is backed by PE players like TPG and QRG. Incidentally, QRG is the family office of the promoters of Havells Group. The company has filed the draft red herring prospectus towards the end of December 2021 and the approval of SEBI is expected to come either towards the end of February or in early March. Currently, QRG and TPG jointly hold 25% in Campus Activewear.
3) The early shareholders and promoters will sell a total of 16% stake in the company to the public. Out of this, TPG will sell 10% of the capital, the promoters will sell 4% of the capital and QRG will sell 2% of the capital. The valuation of Campus Activewear is pegged in the region of Rs.11,000 crore or approximately $1.5 billion.
4) In India, the overall footwear market is estimated at around Rs.60,000 crore of which the sports and leisure shoes segment is pegged at Rs.10,000 crore. This particular space is dominated by Reebok which has nearly half of the market while Campus Activewear is the second largest with about 15-20% market share.
Another footwear company, Metro Shoes had recently concluded its IPO with a good response as well as a strong post listing performance.
5) For FY21, Campus Activewear had reported overall revenues of Rs.718 crore while the EBITDA was Rs.117 crore, implying an EBITDA margin of 16.3%. The company had witnessed lower sales and lower EBITDA on a YoY basis, but that was more due to the lag effect of the pandemic. The revenues of Campus Activewear have consistently grown at a CAGR of 15% over the last 6 years amidst robust demand.
6) India is the world’s second largest footwear manufacturer with a global market share of 13%. China still dominates the global footwear industry with 67% market share. However, the per capita consumption of footwear in India is much lower than the global average.
India has a per capital footwear consumption of 1.66 pairs per annum compared to 3 pairs being the global average and 7 pairs being the median per capital demand in developed markets. The footwear market in India is split among key players like Bata, Relaxo, Liberty, Khadim, Nike, Adidas, Puma, Reebok, Campus Activewear etc.
7) Campus Activewear has an omnichannel approach to sales. It sells substantially through exclusive brand outlets (EBO) as well through online sales. Campus Activewear operates through a network of over 350 distributors across India. Currently, its presence is predominant in North India and is in the process of expanding its footprint nationally in a much more significant way.
The IPO of Campus Activewear will be lead managed by Kotak Mahindra Capital, JM Financial, Bank of America Securities and CLSA. The main purpose of the IPO is to provide a listing presence to the company, improve visibility and offer equity as a currency for future organic and inorganic growth.
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