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IDFC Private Equity’s Rs 100-crore investment, made three years ago, in infrastructure developer Ashoka Buildcon could be valued at 3x at the public float of the construction firm. Ashoka Buildcon is looking at raising around Rs 225 crore ($47 million) through an IPO and IDFC PE’s holding would come down from 15.62% currently to 14.05%, post issue.

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Even after the equity dilution, IDFC PE would continue to remain the single largest (entity) equity holder of the company. The promoter group, through various individuals and investment entities, would hold around 75% in the company after the IPO.

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Given the targeted money to be raised and the estimated issue of new shares, the pricing of the issue could be around Rs 440 per share. This would give the company a valuation of around Rs 2,250 crore and would value IDFC PEs stake around Rs 315 crore($65 million). IDFC had invested around Rs 100 crore in the firm in August 2006.

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IDFC-SSKI and Enam Securities are the book running lead managers (BRLM) and Motilal Oswal Investment Advisors is the co-BRLM to the issue.

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The issue would be closely watched as it would be one of the first mid-sized IPO in the construction space after the market crashed last year and bounced back since March this year. Although valuations in the sector have bounced back sharply after touching lows few months back, it is to be seen how the issue draws investors.

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Ashoka Buildcon, which is primarily into construction of roads and bridges, had reported steady income generation in the year ended March 2009. With total revenues increasing over 50% to Rs 518 crore, it sailed through the downturn quite comfortably.

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Although it did not face serious erosion of profits like the other more volatile real estate developers, its net profit growth slipped to just 5% to Rs 34.8 crore for 2008-09 against a 36% jump the previous year.

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