The central government has set the ball rolling for Cochin Shipyard IPO by asking for proposals from merchant bankers. In a meeting of the Department of Investment and Public Asset Management (DIPAM), investment banks have been asked to submit their bids for managing the upcoming IPO by 6 June.
The government plans to sell 10% of its equity stake in Cochin Shipyard which is currently completely state-owned as of now. The Cochin Shipyard IPO will also involve issue of fresh shares and eligible employees and retail investors are likely to get 5% discount.
Cochin Shipyard will be going for an IPO in the domestic market consisting of 3.39 crore equity shares, including 2.26 crore fresh shares and sale by Government of India of 10 per cent of its stake in the company comprising of 1.13 crore shares
– DIPAM
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The central government is likely to raise around INR6-7 billion through the public offer of the country’s largest ship-building and repair facility while issue of fresh shares will help the shipyard’s future growth plans.
Cochin Shipyard has outlined an aggressive investment plan for the next four years. The company plans to invest in a new ship repair facility as well as in a new dry dock.
OUR ROUGH ESTIMATE IS AROUND INR25 BILLION FOR THE TWO PROJECTS AND PROCEEDINGS FROM IPO WILL BE USED FOR THE SAME
– K Subramaniam, managing director, Cochin Shipyard
Demand for profitable companies
Cochin Shipyard is a profitable company with strong margins and thus, investors are expected to lap up the IPO when it hits the market. The company will initiate the paper work for the public offer in due course. In the financial year ended 31 March 2015, the company’s turnover jumped to INR18.59 billion while its net profit stood at INR2.35 billion.
So far in 2016, 10 companies have come up with their IPOs and have raised about INR6,700 crore. India’s red hot IPO market has rewarded investors handsomely in each of the last four IPOs.
