The initial public offering of infrastructure developer HG Infra Engineering Ltd reached near the halfway mark on the second day of the public issue on Tuesday with support from retail investors, while institutional investors and high net-worth individuals sat on the sidelines.
The public issue of 12.13 million shares, excluding the anchor allotment, received bids for 5.31 million shares, stock exchange data showed. The book was subscribed 44% at the end of day two.
Qualified institutional buyers (QIBs)’ book did not receive a single bid while shares reserved for high net-worth individuals saw just 7% bids.
The portion set aside for retail investors, whose bids value cannot exceed Rs 2 lakh per application, received bids for 85% of the shares.
The company is seeking Rs 1,759.62 crore in valuation from the public issue, which closes on Wednesday. The total issue size is pegged at Rs 462 crore at the upper end of the price band. HG Infra will issue fresh shares worth Rs 300 crore while its promoters will sell 6 million shares worth Rs 162 crore.
On Friday, HG Infra raised Rs 138.59 crore ($21.5 million) by selling shares to anchor investors. HG Infra allotted 5.13 million shares at Rs 270 apiece to 10 asset management companies and one insurer, it said in a stock-exchange filing late on Friday.
DSP BlackRock India Tiger Fund and HDFC Trustee Company each acquired shares worth Rs 16.19 crore. SBI Mutual Fund, Aditya Birla Sun Life Trustee Co, Reliance Capital Trustee Co, L&T Mutual Fund, UTI Mutual Fund, Kotak Mutual Fund, IDFC Asset Management Co and HSBC Mutual Fund also bought shares. Aditya Birla Sun Life Insurance Co was the sole insurer which purchased the shares.
The company will use Rs 90 crore to buy equipment, Rs 115.7 crore to repay debt and an undisclosed amount for general corporate purposes.
The promoters' stake will fall 26.25% after the IPO at the upper end of the price band. This will help the company comply with the Securities and Exchange Board of India's (SEBI) rule of a minimum 25% public float for listed entities.
SBI Capital Markets and HDFC Bank are the merchant bankers managing the IPO. Choice Capital is the adviser on the IPO.
HG Infra will join listed peers such as Capacit'e Infraprojects Ltd, Bharat Road Networks Ltd, Shankara Building Projects Ltd, PSP Projects Ltd, Dilip Buildcon, Sadbhav Infrastructure Project Ltd, PNC Infratech Ltd and MEP Infrastructure Developers Ltd. All these companies went public in the last three years.
Other companies operating in the segment and looking to float IPOs include GR Infraprojects Ltd and GVR Infra Projects Ltd.
HG Infra was incorporated in January 2003. It builds highways, bridges and flyovers. It has also executed water pipeline projects.
The company has completed 12 projects during the last five years. It had 29 ongoing projects in the roads and highways sector with an order book of Rs 3,811.49 crore as on July 2017.