Drone maker IdeaForge’s IPO to open on June 26

Shares of IdeaForge Limited, India’s largest drone maker, are expected to list on BSE and NSE soon and its initial public offering (IPO) will hit the market on Monday, June 26 and will close on June 29. The company proposes to raise a total of Rs 567 crore at the upper end of the price band, which constitutes a fresh issue of Rs 240 crore and an offer for sale of 48.69 lakh shares by promoters and investors amounting to Rs. 327 crore.

The company has reserved 75 per cent of the offer size for qualified institutional buyers (QIBs), 15 per cent for high networth individuals (HNIs) and the balance 10 per cent for retail investors. The IPO is expected to fetch a sum of Rs 550.69 crore and Rs 567.24 crore at the lower and upper end of the price band, respectively.

Proceeds from the fresh issuance to the tune of Rs 50 crore will be utilised for debt payment and Rs 135 crore towards funding working capital gap, Rs 40 crore for investment in product development and the remaining amount for general corporate purposes, the company's co-founders told DH.

When asked why the company had earmarked a lower share for product development, the founder and chief executive and co-founder of IdeaForge Ankit Mehta said, “We are profitable at the unit economic level and so we are able to also invest in product development. Overall, the projections are adequate for the time period we have suggested to utilise the capital.”

Also Read | 10 things to know about the armed Predator or MQ-9B SeaGuardian drones India is set to buy from US

“We will soon expand our offerings into two product categories – tactical unmanned aerial vehicles (UAVs) and middle-mile logistics drones with a payload in the range of 100-200 Kgs and range of 100-200 kilometres,” Mehta told DH. The company will also continue focusing on adding more use cases in existing categories including last mile delivery capability, inspection of vertical assets along with building newer payloads and software applications, he added.

In a conversation with DH, Rahul Singh, vice president- engineering and cofounder of IdeaForge underscored, “We feel last mile delivery will have challenges of sustainable, profitable unit economics in terms of matching the cost of delivery that is achieved on the ground. And hence our focus is more on middle delivery today.”

Last week, IdeaForge raised about Rs 254 crore from anchor investors ahead of the IPO. Some of the leading domestic and foreign investors participated in the round, including Nomura, Invesco, Tata AIA General Insurance Company, HSBC, ICICI Prudential Mutual Fund, Mirae Asset Mutual Fund, HDFC Mutual Fund and Goldman Sachs.

The company also raised Rs 60 crore in a pre-IPO placement round from institutional investors, including Tata AIG General Insurance, 360 One Special Opportunities Fund- Series 9 and 10, Motilal Oswal Midcap Fund, and Think Investments PCC.

As per the company, investors can bid for a minimum of 22 equity shares in the public issue and in multiples of 22 equity shares thereafter.

Started in 2007 by IIT Bombay graduates, IdeaForge has a market share of almost 50 per cent in India's unmanned aircraft systems sector. Talking about the challenges in the Indian drone market, Mehta said, “The recent liberalisation of the policy for export of Drones/UAVs meant for civilian end uses from India has removed the major bottleneck in the growth of the drone industry to the largest extent possible in the domain.” Certification for beyond visual line of sight (BVLoS) operations in the civil space is probably the only remaining bastion left to be killed, he added.

The leadership team of IdeaForge seemed optimistic about the market opportunities coming their way in the growing drone market. “Since the onset of the pandemic, the industry has become a must-have technology. Civil side is truly unlocked and with the policy intervention, the potential has just started to build up,” said Mehta.

The global drone industry is expected to increase at a fast pace at a CAGR of ~20 per cent from the calendar year 2022-30, reaching almost $91.3 billion by CY30. The Indian drone market is projected to grow from $43 million in FY22 to $812 million by FY27, exhibiting a growth CAGR of 80 per cent FY22-27.