ideaForge Bags SEBI’s Nod For IPO

In the middle of a crisis, after one of its drones exploded in Chhattisgarh, injuring four pilots, ideaForge has received the final approval from market regulator SEBI for its IPO plans. 

In a public statement released on April 28, SEBI said that it issued an observation letter to the company on April 13, which was equivalent to its approval. This comes a couple of months after the drone manufacturer filed its draft red herring prospectus (DRHP) with SEBI for its IPO. 

The public issue comprises a fresh issue of shares worth INR 300 Cr and an offer for sale (OFS) element of nearly 48.7 Lakh shares. The startup plans to deploy the proceeds from the public listing to pay off its INR 50 Cr debt. ideaForge will also route INR 135 Cr towards fulfilling its working capital requirements, while another INR 40 Cr will go towards product development.

The rest of the capital raised from markets will go towards general corporate purposes.

Founded in 2017 by IIT Bombay alumni Ankit Mehta, Ashish Bhat, Rahul Singh and Vipul Joshi, ideaForge manufactures drones for both civilian and military purposes. With 20 patents under its belt, the startup counts names such as Infosys, Qualcomm, IndusAge Partners, Celesta Capital and others as its backers. 

As per DRHP, the promoter group, comprising Mehta, Singh and Bhat, will skip selling shares under OFS, while the likes of Qualcomm, IndusAge Partners, and Celesta Capital could offload some of their stake under offer for sale. 

While Mehta is the largest shareholder in the startup, with a 9.93% stake, fellow cofounders Rahul Singh and Ashish Bhat hold 9.7% and 9.6% ownership in the company, respectively. Another cofounder Joshi owns a mere 3.9% stake in the drone manufacturer. 

Celesta Capital is the biggest institutional investor, with 13.4% shares, followed by Florintree which has a 12.4% stake in the company. 

JM Financial and IIFL Securities are the book-running lead managers for the IPO. 

The SEBI approval came around the same time as one of ideaForge’s drones exploded while charging on April 27 in Chattisgarh’s Raigarh district. Four pilots were injured during the incident, with two of them critical.

Meanwhile, the DGCA is also said to have acted upon a complaint and commenced a probe into the incident. Internally, the company is also vetting all the information related to the incident and is investigating the matter.

The company has also said that it would issue an additional set of SOPs for users to prevent any such incidents in the future. 

The development related to the explosion of one of its drones could have a bearing on the ideaForge’s public listing plans. 

With investors steering clear of companies involved in a regulatory quagmire or public controversies, it remains to be seen whether ideaForge actually decides to move ahead with its listing plans.