Appliance maker Amber Enterprises (India) Pvt. Ltd, shipping company Seven Islands Shipping Ltd and construction firm HG Infra Engineering Ltd have filed their draft proposals with the Securities and Exchange Board of India (SEBI) to float initial public offerings (IPOs).
These three firms join more than two dozen companies that have either recently floated IPOs and an equal number of companies that are gearing up to launch maiden offerings as they look to tap into the buoyant stock market.
Indian firms have already raised more than Rs 30,000 crore from the IPOs this year. Most of these companies have listed at a premium. And many of them have managed to consolidate their gains.
Despite the recent decline in Indian equities, the BSE’s benchmark Sensex has risen close to 18% since the start of the year, helped by strong inflows from domestic as well as foreign institutional investors.
Gurgaon-based Amber Enterprises is backed by private equity firm ADV Partners. In 2012, Fairwinds Private Equity (then Anil Ambani-led Reliance Equity Advisors India Ltd) invested $12.6 million in Amber. Fairwinds had acquired a 34% equity stake in Amber for Rs 110 crore in two tranches, in 2012 and 2013. In January 2017, Fairwinds’ entire stake of 34% was acquired by ADV Partners Ltd.
In 2011, Amber had raised Rs 30 crore from IFCI Venture Capital’s Green India Venture Fund via compulsory convertible debentures. That deal gave Amber’s promoter group buyback rights to the extent of 60% of the stake acquired by IFCI Venture Capital at an annualised return of 20%.
Here’s a snapshot of the proposed IPOs.
The proposed IPO size is Rs 555 crore, comprising a fresh issue of shares worth Rs 450 crore and a sale of shares by promoters Jasbir and Dalgit Singh.
Use of proceeds:
The Gurgaon-based company will use Rs 345 crore of the net proceeds towards repayment and advance payment of certain loans. The balance amount is being proposed for general corporate purposes.
Edelweiss Financial Services, IDFC Bank, SBI Capital Markets and BNP Paribas are the merchant bankers managing the IPO.
Cyril Amarchand Mangaldas is the legal counsel representing the company. Khaitan & Co is the legal counsel representing the merchant bankers.
Amber Enterprises makes air-conditioners, microwave ovens, components for refrigerators and other consumer durables for clients such as Videocon, John Deere, Swaraj Mazda, Godrej, Whirpool, Blue Star, Philips and Voltas.
Besides, the group runs Amber Aviation, which operates aircraft charters and provides commercial pilot training.
Amber’s promoters also entered the off-grid solar power generation sector in 2015 in partnership with Silicon Valley-based Twin Creeks Technologies.
Amber serves eight of the 10 top room air-conditioner brands in India and counts Daikin, Hitachi, LG, Panasonic, Voltas and Whirlpool as its key customers. It claims a market share of 55.4% in this category by volume for the year ended March 2017.
Amber was founded in 1994 with a single factory in Punjab. It now has 10 manufacturing units across seven locations, of which six are operational. The company was set up Kartar Singh and is now managed by his sons Jasbir and Daljit.
For the financial year 2015, Amber’s net profit stood at Rs 29.09 crore on consolidated revenue from operations of Rs 1,230.64 crore. Total debt as on March 2016 was Rs 209.24 core, according to VCCEdge.
Seven Islands Shipping
The IPO comprises a fresh issue of shares worth Rs 200 crore besides a sale of shares worth Rs 250 crore by American private investor Wayzata Investment Partners and the promoters.
Wayzata, which invested Rs 75 crore in the Mumbai-based logistics company for a 19.3% stake, will partially exit through the IPO. As will promoters Thomas Wilfred Pinto and Leena Metylda Pinto, who own 63% and 10.6%, respectively, of the company.
Use of proceeds:
The company will use Rs 184.05 crore to purchase a very large crude carrier, besides spending on general corporate purposes.
Edelweiss is the sole merchant banker managing the IPO.
Trilegal is the Indian legal counsel representing the company and selling shareholders. Luthra & Luthra Law Offices is the legal counsel representing the merchant banker.
Seven Islands Shipping ranked third among Indian liquid seaborne logistics companies by deadweight tonnage, the company said in its DRHP.
It operates under two main categories—seaborne logistics of crude oil trade, and liquid products trade that comprise white oils, black oils, lube oil and liquid chemicals.
All its vessels, a total of 12 of all sizes, are registered, flagged and operated as Indian-owned vessels. Such vessels, as opposed to Indian-owned but foreign-flagged vessels, have the first right of refusal in any tender by an Indian company for seaborne transposition of oil and other liquid products.
Seven Islands primarily operates along the Indian coast, Arabian Gulf and Southeast Asia. The company counts Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp as its key customers.
Seven Islands, incorporated in May 2002, began operations with a single vessel and a total deadweight capacity of 6,009 tonnes in fiscal year 2002-03. It currently owns and operates 12 vessels with a total deadweight capacity of 900,558 tonnes. Its fleet includes two small vessels, seven medium-range vessels, two Suezmax vessels and one VLCC vessel.
The company reported consolidated net profit of Rs 106.97 crore in 2016-17 on revenue from operations of Rs 381.39 crore.
Its revenue was Rs 295.04 crore in 2015-16 and Rs 158.32 crore the year before. Revenue has grown at a compound annual pace of 55.2% over three years through 2016-17.
Its net profit has risen at a compound annual rate of 56.5% for the same period. Net profit was Rs 94.25 crore in 2015-16 and Rs 43.7 crore the year prior.
HG Infra Engineering
The company will issue fresh shares worth Rs 300 crore while the promoters will sell 6 million shares.
Use of proceeds:
The company will use Rs 90 crore to buy capital equipment and spend Rs 115.7 crore toward repayment and advance payment of its debt. The company will spend an undisclosed amount on general corporate purposes.
SBI Capital Markets and HDFC Bank are the merchant bankers managing the IPO. Choice Capital is the adviser on the IPO.
Shardul Amarchand Mangaldas is the legal counsel for the public offering. Crawford Bayley & Co is the legal counsel representing the selling shareholders.
Jodhpur-based HG Infra was incorporated in January 2003. It is engaged in infrastructure construction, development and management and has experience in building highways, bridges and flyovers.
Its main line of business is providing engineering, procurement and construction services on a fixed-sum turnkey basis, besides undertaking civil construction and related infrastructure projects on item rate and lump sum basis.
The company has also executed water pipeline projects and currently has two water supply projects in Rajasthan on a turnkey basis, which includes the designing, construction, operation and maintenance of the project.
HG Infra has completed 12 projects during the last five years.
It currently has 29 ongoing projects in the roads and highways sector with an order book of Rs 3,811.49 crore as on July 2017, or 96.52% of its total order book size.
While the company often independently executes the projects, it also sometimes forms project-specific joint ventures with other infrastructure and construction companies for certain large projects.
Projects from public-sector clients accounted for about 73% of its total revenue for 2016-17. The company counts the National Highways Authority of India and Jaipur Development Authority among its public-sector clients. Its main private sector clients include Tata Projects Ltd and IRB-Modern Road Makers Pvt Ltd.
HG Infra reported consolidated net profit of Rs 53.33 crore on total revenue of Rs 1,058.58 crore.
Its revenue stood at Rs 743.28 crore in fiscal 2016 and Rs 367.59 crore the year prior. The revenue has grown at a compound annual rate of 34.3% in five years through fiscal 2017.
Its net profit stood at Rs 35.35 crore in fiscal 2016 and Rs 4.63 crore in the previous financial year. Profit has risen at a compound annual rate of 37% from fiscal 2013 to 2017.