State-owned Housing and Urban Development Corporation Ltd (Hudco) is seeking a valuation of as much as Rs 12,011.4 crore ($1.87 billion) through an initial public offering that opens in the second week of May.
The housing and urban infrastructure financier has fixed the price band for its offering of 204 million shares at Rs 56-60 per share, it said. The IPO, which does not have an anchor book, will open on 8 May and close three days later.
The government, which fully owns the company, is divesting a 10.2% stake through the IPO. It will raise Rs 1,224.35 crore at the upper end of the price band. The company is not selling any fresh shares.
Hudco will become the first government-owned firm to go public since National Building Construction Corporation Ltd (NBCC) floated its public offering in March 2012.
On the grey market, Hudco shares are quoting at a premium of Rs 24-25 apiece over its price band, two grey market dealers told VCCircle.
The grey market is a pseudo, over-the-counter market where IPO shares are traded before the official listing on a stock exchange.
Hudco’s IPO has been slightly delayed because the company didn’t have adequate independent directors on its board.
The Department of Public Enterprises’ guidelines on corporate governance mandate that independent directors should make up a third of the board in companies with a non-executive chairman and half the board in companies with an executive chairman.
Until the second week of April, Hudco’s board had nine directors. These included four independent directors with one of them restrained by the Securities and Exchange Board of India (SEBI) from dealing in the capital markets. That translated into fewer than the 50% count mandated under the guidelines and delaying the IPO.
The company inducted retired IAS officers Pratima Dayal and Sudip Kumar Nanda as independent directors 10 days ago. Its 10-member board now has five independent directors.
“The company is now aligned with all statutory guidelines,” said one person familiar with the development on the condition of anonymity. He added that the government received “strong response” during the roadshows concluded nearly a month ago.
Hudco had filed draft documents for an initial share sale on 2 January. It got SEBI clearance on 10 March, to become the seventh company to receive regulatory approval for an IPO this calendar year.
Hudco’s IPO is part of the government’s record disinvestment programme. The Centre is looking to raise Rs 72,500 crore through divestment in the financial year that began on 1 April.
Of the total, it aims to garner Rs 46,500 crore from minority stake sales through new listings as well as already listed firms, Rs 15,000 crore from strategic sales and Rs 11,000 crore through listing of state-owned insurance companies, budget documents show.
Apart from Hudco, the government has initiated share sale in unlisted companies such as Cochin Shipyard Ltd, IRCTC, IRFC, IRCON, Hindustan Aeronautics Ltd and Airport Authority of India Ltd.
For more on the Hudco IPO, click here.
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