Sadbhav Infrastructure Project Limited has filed its revised red herring draft prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its IPO. The company, a subsidiary of the diversified Sadbhav Engineering Limited, specializes in build-operate-transfer (BOT) road projects and has operations spread across Maharashtra, Gujarat, Rajasthan, Karnataka, Haryana, Madhya Pradesh and Telangana besides border check posts in Maharashtra.
In the revised prospectus, the company has stated that its existing investors Norwest Venture Partners and Xander Investment Holding will offer 81.02 lakh and 48.53 lakh shares respectively in the offer for sale while the company will raise INR425 crore from through fresh issue of shares. This is a reduction from the earlier plan under which Xander and Norwest were to offload 1.61 crore shares each. The company also planned to raise INR600 crore through the fresh issue of shares.
Positive sentiments in the secondary market and the government’s focus on infrastructure development have led several infrastructure companies to tap the IPO market. This is a natural step as the fresh capital can be used to reduce high interest debt. However, several companies struggled recently to gain traction in the IPO market due to lofty valuations and leveraged balance sheets. Important among these are PNC Infratech and MEP Infrastructure which have subsequently left their IPO investors high and dry. PNC Infratech shares lost 4.5% while shares of MEP Infrastructure closed 10% below the issue price on the listing day.
The reduction in offer for sale and fresh issue of shares by Sadbhav Infrastructure may be positive news for the IPO. The company filed its papers with the market regulator in December 2014 but withdrew the prospectus last week citing changes in issue structure. Sadbhav Infrastructure got the market regulator’s nod for launching its IPO last month. It has been fast in revising the prospectus and thus, could bring in the IPO as soon as next month.