Gujarat Pipavav Port Ltd has set a price band of Rs 42-48 per share for its public float that seeks to raise as much as Rs 500 crore. At the upper end of this price band, the consortium of private equity investors that include IDFC Infrastructure Fund, Jacob Ballas, IL&FS Trust, Infrastructure Fund of India and New York Life International will be sitting on 20% unrealised gains on their five year old investment.
The company is the developer and operator of Port Pipavav, India’s first private sector port, which has multi-cargo and multi-user operations. It has the exclusive right to develop and operate Port Pipavav and related facilities until September 2028.
Earlier promoted by Nikhil Gandhi led SKIL, the company is now led by Dutch firm APM Terminals an A P Moeler Maersk Group company. The company intends to use the funds raised for construction of container yards and allied facilities at Pipavav Port, Phase 2 of capital dredging at the same port, purchase of certain specialised cranes besides repayment of sponsor support loan to the promoter firm APMT Mauritius.
While PE investors who pitched in with investments around five years ago are sitting on some gains at the price band, there are others who are sitting on book losses on their investments. These include certain entities and funds under UTI that had acquired shares around ten years ago at an issue price of Rs 80 a piece.
Moreover, the price band also means New York Life International is sitting with some unrealised losses as it initially invested Rs 48 crore at a price of Rs 80 per share and later put in additional Rs 2 crore at a lower price of Rs 40 a piece.
At the upper end of the price band the issue will mean equity dilution of around 26%(post dilution) and will value the firm at around Rs 1,909 crore($405 million).
The company that is considering a Pre-IPO placement of shares with certain investors also plans to issue shares to its promoter APM Terminals at the issue price as a preferential allotment to ensure that post IPO it continues to hold at least 46% stake in the firm. APM Terminals at present owns 54.81% stake.
At the upper end of the price band APM Terminal’s stake will get diluted to around 40.48% and it will need to infuse an additional Rs 105 crore odd to achieve its targeted holding. IDFC-SSKI and Kotak Mahindra Capital are the book running lead managers to the issue.