Indian capital market regulator Securities and Exchange Board of India (SEBI) has issued final observation on the draft red herring prospectus (DRHP) submitted by infrastructure firm Dilip Buildcon for an initial public offering (IPO). The Bhopal-based company plans to raise INR650 crore (USD101.6 million) through fresh issue of equity shares. In addition, existing investors plan to sell 1.49 crore shares in the offer. The issue will be managed by Axis Capital, Deutsche Equities India and PNB Investment Services. The company had filed its DRHP with the market regulator on 31 March 2015.
Use of funds
The proceeds will be used towards purchase of engineering equipment, prepayment/scheduled repayment of term loans, and meeting working capital requirements among others.
Selling shareholders
Private equity investor BanyanTree Growth Capital LLC owns 11.42 million shares amounting to 9.75% equity stake in Dilip Buildcon. The PE firm invested INR75 crore in Dilip Buildcon in February 2012. While BanyanTree plans to offload its entire shareholding in the company though the public issue, promoters Dilip Suryavanshi and Devendra Jain also plan to sell 2.28 million and 1.23 million shares respectively.
Company background
Dilip Buildcon is a private sector EPC contractor that specializes in constructing state and national highways, city roads, culverts and bridges. The company has completed the construction of 47 road projects in the Indian states of Madhya Pradesh, Gujarat, Himachal Pradesh and Maharashtra while having expanded its presence to six more states including Tamil Nadu, Telangana, Andhra Pradesh, Karnataka, Uttar Pradesh and Rajasthan, with ongoing projects. As of September 2014, Dilip Buildcon had an order book of INR56.65 billion, consisting of 28 third party road EPC projects, two irrigation projects and two urban development projects.
Infrastructure space is seeing heightened activity this year with a number of high-profile players getting listed. This includes MEP Infrastructure Developers and PNC Infratech which raised INR324 crore and INR488 crore respectively through their IPOs although their listing was lackluster. In addition, Sadbhav Infrastructure Project Limited plans to tap the primary market to raise funds. The subsidiary of the diversified Sadbhav Engineering Limited reduced its IPO size in a revised DRHP filed with SEBI last month.
