As it prepares to debut on India’s stock exchanges, furniture retailer Pepperfry has started revamping its corporate structure.
To begin with, Ambareesh Murty and Ashish Shah, the company’s founders, moved Pepperfry’s domicile from the Cayman Islands to Mumbai. To create a main listing in the US, they had registered Pepperfry in the Cayman Islands. They then modified their approach since a foreign-registered business cannot make an initial public offering (IPO) in India, per Indian capital market restrictions.
In order to comply with regional capital market requirements, the partners are also reshaping the firm’s board of directors by recruiting independent directors. If the board’s chairman is an independent director, the board must have 33 percent, independent directors.
Pepperfry hopes to raise up to $300 million by selling new stock and secondary shares. Although the founders do not want to sell their shares in the IPO, outside investors who own significant positions in Pepperfry, such as Norwest Ventures, Broad Street Investments, Bertelsmann, and General Electric Pension Trust, are expected to cash out some of their investments.
The amount of stake they may sell through the IPO is limited. According to regulations, shareholders who control more than 20% of a firm are not allowed to sell more shares than 50% of their pre-issue holding, and shareholders who own less than 20% are not allowed to sell more shares than 10% of their pre-issue holding.
This year, Pepperfry intends to submit a draft IPO prospectus to the authority on capital markets, Sebi. So far, it has raised $285 million in stock and debt to fund its expansion plans. Co-founder Shah said, “Pepperfry is well-capitalized and headed toward profitability.”
It last raised $40 million in debt in November 2021 and reduced operational losses by 60% to Rs37 crore in the fiscal year 2021. Operational losses were Rs 95 crore in the 2020 fiscal year.
Before branching out into the furniture retail market, Murty and Shah, who met while working for eBay, founded Pepperfry in 2011. Presently, Pepperfry is the biggest furniture retailer in the nation, with close to 200 locations. 9.8 lakh shipments totalled 9.8 lakh over the 12 months that ended in June 2022.
