Dilip Buildcon to raise over $100M in IPO; PE firm BanyanTree Growth Capital eyes exit

Bhopal-based mid-size construction company Dilip Buildcon Ltd has filed its draft red herring prospectus (DRHP) with securities market regulator SEBI to float its initial public offer (IPO).

The proposed public issue comprises fresh issue of equity shares to raise up to Rs 650 crore ($104 million), besides an offer for sale which may lead to a complete exit for its private equity investor BanyanTree Growth Capital.

The galloping share prices in the secondary market have triggered a rush of companies filing documents to go public. Majority of these firms are PE-backed and in several of them, the investor is looking to exit or part-exit in the public issue.

Here's a snapshot of the IPO

* IPO comprises fresh issue of shares to raise up to Rs 650 crore in addition to an offer for sale of up to 11.4 million equity shares or 9.75 per cent stake held by BanyanTree Growth Capital, and 2.27 million and 1.22 million equity shares by co-promoters Dilip Suryavanshi and Devendra Jain, respectively.

* Bankers: Axis Capital, Deutsche Equities and PNB Investment Services.

Use of proceeds

* Of the total proceeds of the fresh issue, around Rs 196 crore would be used for purchasing of engineering equipment, nearly Rs 104 crore for prepayment of a portion of term loans availed by the company, approximately Rs 296 crore to meet working capital requirements and remaining for general corporate purposes.


* Incorporated in 1988, Dilip Buildcon, together with its subsidiaries, provides engineering, procurement and construction services in India.

* The core business of the Bhopal-based EPC firm is undertaking construction projects across India in the roads and irrigation sectors. The company specialises in constructing state and national highways, city roads, culverts and bridges.

* The business comprises construction, under which it undertakes roads, irrigation and urban development projects on an EPC basis; and infrastructure development business, under which it undertakes building, operation and development of road projects on a BOT basis with a focus on annuity projects.

* As of September 30, 2014, the company had an order book of Rs 5,666 crore, consisting of 28 third-party road EPC projects, two of own road BOT projects, two irrigation projects and two urban development projects.

* As on November 30, 2014, the company had 12,030 employees.


* The company's growth has been on a tear with both top-line and profit rising 10-fold between FY10 and FY14. However, its revenue growth rate has got moderated and net profit declined over the last two years partly due to galloping interest cost.

For the financial year ended March 31, 2014, the company posted total revenues of Rs 2,401 crore against Rs 1,926 crore in FY13. During the fiscal, it registered a net profit of Rs 186 crore, against Rs 241 crore in the previous year. For the six months ended September 30, 2014, it posted revenues of Rs 1,025 crore with a net profit of just Rs 8.97 crore.


* Private equity firm BanyanTree Growth Capital had invested Rs 75 crore to buy just under 10 per cent stake in the firm. It has now offered to sell its entire stake in the firm.

(Edited by Joby Puthuparampil Johnson)

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