Gurgaon-based coal washery operator and power producer ACB (India) Ltd has refiled its draft red herring prospectus (DRHP) for an initial public offering (IPO) which would see its promoters sell some shares and private equity investor Warburg Pincus part exit in the offer for sale issue. ACB is the country's largest coal washery company.
This is the third time the firm is looking to go public. It had previously filed its DRHP in 2011 and then again last year. However, as against the previous proposed floats, it is not looking at any fresh issue this time around.
It had originally planned to raise Rs 575 crore and the PE investor was looking to offload a third of its holding. Last year, when it refiled its DRHP, it had pruned the size of the primary issue and increased the quantum up for sale in the secondary issue. ACB had sought to raise Rs 415 crore last year besides an offer for sale where Warburg Pincus was to sell over half of its holding.
In the latest DRHP it has said Warburg Pincus will sell just under half of its 21.9 per cent stake.
An email query to Warburg Pincus spokesperson for more information on its offer for sale, did not immediately elicit a response.
This comes as another PE-backed firm filing for a public float. The uptick in the stock market has prompted a slew of firms to file for an IPO. Last week, Uniparts India filed for an IPO where PineBridge Investments is looking to part exit its investment. Click to read more on how PE-backed firms are leading the charge to go public.
Snapshot of the proposed public issue:
- Total 3.09 crore equity shares on offer, where Warburg Pincus has offered to sell 2.38 crore shares and rest will come from promoters.
- The issue comprises 12.89 per cent of the post issue paid up capital.
- Bankers: Edelweiss Financial Services and Macquarie Capital are managing the issue.
Business & promoter
- ACB, the flagship company of the Aryan Group, was incorporated in March 1997 as Aryan Coal Benefications Pvt Ltd. It started its operations in 1999 at the Korba Coalfields of South Eastern Coalfields Ltd in Chhattisgarh.
- The firm has a coal washing capacity of 62.57 million tonnes per annum and is spread across 17 locations in the country, making it the top coal washery in India. Plans to increase our aggregate design beneficiation capacity, on a proportional basis to 91.79 MTPA by the end of FY19.
- Washeries located across the states of Chhattisgarh, Odisha, Maharashtra and Andhra Pradesh.
- Its beneficiation plants generate coal rejects as a by-product, part of which it reprocesses to generate power. As of August 2014, it had thermal power plants with aggregate installed capacity of 380 MW fuelled by coal rejects, reprocessed coal rejects and blended coal. It sources majority of the coal rejects for the operational power plants in Chhattisgarh from its coal beneficiation business.
- It also has the Sangli Wind Power Plant and an investment in Kakinada Power Plant (208 MW) (which is owned by its associate firm).
- ACB seeks to push up the revenue from power operations, which has higher margins than the core business.
- It has four power projects with an aggregate design capacity of 3,050 MW at various stages of construction, implementation and development. It has also invested in four power projects with an aggregate design capacity of 700 MW, which are being constructed, implemented and developed by associates and its proportional capacity is 322.06 MW.
- Its primary customers for coal beneficiation and allied receipts are government entities engaged in power generation. It currently has seven customers in power generation business.
ACB (India) Ltd posted annual total revenue of Rs 1,606 crore for the financial year ended March 31, 2014 as against Rs 1,746 crore for FY13. The the firm's EBITDA declined from around Rs 756 crore to Rs 595 crore while net profit shrunk from Rs 331 crore to Rs 180 crore in the same period. Power generation brings around one third of its revenues and 40 per cent of its EBITDA.
Warburg Pincus has invested around Rs 440 crore through a mix of preferential allotment, rights issue and secondary purchases between 2008 and 2011. It owns around 21.9 per cent stake in ACB and is selling just under half of its stake as part of the offer for sale.