Security and Intelligence Services (India) Ltd (SIS) has hired four investment banks as it prepares for an initial public offering (IPO) of almost Rs.1,000 crore, say reports. SIS has hired Kotak Mahindra Capital Co. Ltd, ICICI Securities Ltd, Axis Capital Ltd and IIFL Holdings Ltd to manage the IPO, said the person. CX Partners had picked up a 20% stake in the security services firm for Rs.500 crore in 2012, valuing it at Rs.2,500 crore.
The development marks yet another planned exit for the home-grown private equity (PE) fund launched by Ajay Relan. “A large part of the IPO will be an offer for sale by CX Partners. The PE investors are the driving force behind the IPO and are looking to exit several of their investments and the SIS IPO is part of that move,” say sources.
The SIS India IPO will also see the firm raise primary capital, which it plans to utilize to grow through acquisitions, add reports. According to the company’s website, the firm reported revenue of almost Rs. 3,500 crore in 2015. Apart from offering security services, SIS India has also expanded into other businesses such as facility management.
According to experts, while security services is a big market, the industry faces several challenges. “The market for security services such as guarding is huge and there is easy availability of manpower. However, most of the manpower is unskilled for the role of guarding. So companies need a lot of focus on skill development, creating campuses to train people,” said Dhanraj Bhagat, partner at Grant Thornton India LLP.
Focus is also needed on compliance issues, such as proper maintenance of personal identity documents of people hired for such roles, he said, adding that these matters can increase costs for the industry. So far this year, 10 companies have raised Rs.6,743 crore through the IPO route, while last year 21 companies raised Rs.13,614 crore, according to data from primary market tracker Prime Database.
