Taiwanese electronics contract manufacturer Foxconn has set the ball rolling to liquidate a portion of its holding in Bharat FIH Ltd, which makes and assembles Xiaomi mobile phones in India.
Bharat FIH has filed a draft proposal with the Securities and Exchange Board of India for an initial public offering that comprises a fresh issue of shares worth Rs 2,501.9 crore and secondary market sale of shares worth an equal amount by a Foxconn affiliate.
This is Foxconn’s second liquidity move this week, after portfolio company Snapdeal Ltd filed its draft proposal on Tuesday for an IPO slated for 2022.
While Foxconn may be taking a haircut on its bet on Snapdeal, the liquidity event from Bharat FIH is likely to bear fruit after the company turned a profit in 2019-20 and is on course to post a profit for the third straight year.
Bharat FIH will use Rs 1,058.1 crore from the net proceeds towards capital expenditure. The company will also infuse Rs 36.32 crore in its subsidiary Rising Stars Hi-Tech Pvt. Ltd. It will use the remaining proceeds to meet its working capital requirements and general corporate purposes.
Kotak Mahindra Capital Co, Citigroup Global Markets India, BNP Paribas, and HSBC Securities and Capital Markets (India) are part of the syndicate to arrange and manage the share sale.
FIH Mobile, another Bharat FIH promoter entity and a Foxconn group company listed on the Hong Kong Stock Exchange, jumped as much as 6% after it publicly announced the proposal to list the Indian arm.
Incorporated in 2015, Bharat FIH claims to be India’s largest electronic manufacturing services company with a 15% market share by value.
The company mainly makes mobile phones, but has been expanding into industries such as electric vehicles, televisions and hearables since March 2021.
Bharat FIH anticipates some of these industries to benefit from regulatory support such as production-linked incentive schemes of the Indian government.
For the six months ended September 2021, the company clocked a net profit of Rs 89.17 crore on revenue from operations of Rs 10,155.79 crore. Revenue jumped over 60% from the corresponding period last year, which was impacted by lockdowns and isolation measures in the aftermath of the coronavirus pandemic.
For 2020-21, the company reported a profit of Rs 161.91 crore on revenue of Rs 15,845.85 crore. This is down from a profit of Rs 389.71 crore on revenue of Rs 26,635.55 crore for the year ended March 2020.