The initial public offering (IPO) of infrastructure developer HG Infra Engineering Ltd was subscribed 11% on the first day of the issue on Monday, with retail investors making most of the bids.
The public issue of 12.13 million shares, excluding the anchor investors’ portion, received bids for 1.35 million shares, stock-exchange data showed.
Institutional investors didn’t bid while high-net-worth individuals made only a handful of bids. The portion set aside for retail investors, who cannot buy shares exceeding Rs 2 lakh per application, was covered 20%.
Jodhpur-based HG Infra’s IPO will close on Wednesday. The company is seeking Rs 1,759.62 crore in valuation from the public issue. The total issue size is Rs 462 crore at the upper end of the Rs 263-270 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 BlacRock 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 on 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.