Coal washery firm ACB (India) re-files for IPO; Warburg Pincus to part-exit

Coal beneficiation and power generation firm ACB (India) has re-filed its draft red herring prospectus (DRHP) with the market regulator for a public offering which will see the company raise Rs 415 crore ($70 million) besides an offer for sale by existing investor Warburg Pincus. ACB plans a secondary sale of 38.8 million shares, a chunk which will be sold by Warburg Pincus besides some promoters.

Compared with the previous DRHP filed in June 2011, ACB has reduced the size of the primary issue and increased the size of the secondary issue. Two years ago, it was looking to raise Rs 575 crore which has been pruned by around 28 per cent.

Moreover, previously Warburg Pincus was to sell around a third of its 21.9 per cent stake; as per the new proposal, it is looking to sell over half of its holding.

Warburg Pincus invested over Rs 320 crore through a mix of preferential allotment, rights issue and secondary purchases between 2008 and 2009. It owns around 21.9 per cent stake in ACB and is selling a little over half of its stake (12.6 per cent of pre-issue capital) as part of the offer for sale. Niten Malhan represents the private equity firm on the board of ACB.

Besides the PE investor, the promoters who hold over 75 per cent stake in the company are also selling some shares.

As of January 31, 2013, ACB was the largest coal beneficiation company in India, with an aggregate design beneficiation capacity, on a proportional basis, of 62.34 million tonnes per annum. The company plans to increase its aggregate design beneficiation capacity to 93.61 million tonnes per annum by the end of FY17.

ACB also has a presence in the power sector with an operational capacity of 282 MW. It has invested in two power projects with an aggregate design capacity of 650 MW with five power projects with an aggregate design capacity of 3,080 MW at various stages of construction, implementation and development.

ACB reported a 5.85 per cent increase in total income to Rs 1,358 crore with profit after tax up 164 per cent to Rs 273 crore in FY12 compared with FY11. In FY12, coal washing contributed 83 per cent of the revenues of the company while the rest came from power generation. For the nine-month period ended December 31, 2012, ACB had income of Rs 1,302 crore with profit after tax of Rs 277 crore.

It plans to use the funds from the IPO to finance construction and development of the second phase of 30 MW blended coal-based power project at Chakabura, Chhattisgarh and invest in subsidiary TRN Energy, which is developing a 2 x 300 MW coal-based thermal power plant in the Raigarh District, Chhattisgarh.

IDFC Capital, Edelweiss Capital, JP Morgan India and Macquarie Capital Advisors (India) are the global coordinators for the issue while Axis Bank, ICICI Securities and Yes Bank are the book running lead managers to the issue.

(Edited by Joby Puthuparampil Johnson)

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