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IL&FS Transportation IPO In January; Trikona Trinity To Sell Stake

30 December, 2009

IL&FS Transportation Networks Ltd (ITNL), a unit of IL&FS, plans to raise 7 billion rupees ($150 million) through an initial share offer in January, a top official told Reuters, joining a spate of issuers looking to take advantage of a surge in Indian stocks this year.

ITNL, which builds roads, railways and waterways, filed a draft red herring prospectus (DRHP) with the market regulator on Sept. 29, and is awaiting clearance, Managing Director Karunakaran Ramchand said in an interview.

“The feel-good factor is back in the market, and there is a momentum happening in the road sector. For India, given the flavour is infrastructure, it’s right time for an IPO,” he said.

The IPO, which will make up about 10 to 15 percent of the firm’s expanded share capital, is likely to open in the third or fourth week of January, he said.

Of the roughly 7 billion rupees expected from the sale, 1 billion rupees will go to Trinity Capital, a subsidiary of Trikona Trinity Capital Plc that is selling its entire 2.5 percent stake in the firm, he said.

The rest would be newly issued shares, including a pre-IPO or anchor investor placement, he said.

Infrastructure finance firm IL&FS holds a 78.8 percent stake in ITNL, while IL&FS Employees’ Welfare Trust holds 6.3 percent and Goldman Sachs Strategic Investments Ltd, a unit of Wall Street bank Goldman Sachs, owns 5 percent.

Standard Chartered IL&FS Asia Infrastructure Growth Fund, a joint venture between UK lender Standard Chartered and IL&FS, owns 5 percent. The remaining 2.4 per cent is held by Bessemer India Capital Holdings II Ltd, a unit of U.S.-based Bessemer Venture Partners.

ITNL will use about 5 billion rupees from the sale proceeds to repay short-term debts and the remaining 1 billion rupees for general corporate purposes and issue expenses, Ramchand said.

The IPO will be lead-managed by HSBC Invest Direct, Enam Securities, Nomura, and JM Financial. SBI Capital Ltd and Adventus Capital Ltd are co-lead managers.

Indian companies plan to raise more than $10 billion worth of equity in coming months as they look to capitalise on an 80 percent surge in the Indian stock market this year. Companies planning share sales include NMDC Ltd, NTPC Rural Electrification Corp and Jindal Power.

GOVERNMENT PROJECTS

ITNL manages about 10,000 lane-kilometres of roads on a build-operate-transfer basis and has been qualified by government authorities to bid for 15 projects worth 160 billion rupees, Ramchand said. It has submitted applications for 72 projects worth 470 billion rupees, he said.

ITNL will secure funding of 30 billion rupees for three road projects — Jharkhand Road Development Project, Ranchi-Hazaribaug and Pune-Solapur — by January 15, he said. The company has also received letter of intent for Chandrapur-Warora road project, and is expecting confirmations for two more.

ITNL is also looking to diversify into airport infrastructure after parent IL&FS acquired a stake in Maytas Infra Ltd, Mukund Sapre, the firm’s executive director said.

“We took over the two airport development projects — Shimoga and Gulbarga — of Maytas. We are looking at investing in these projects,” he said.

“We are looking at international airport projects in association with our strategic technical advisor, Airports Authority of India. We will bid for such projects as and when they come up,” Sapre said.

Road development constitutes over 90 percent of ITNL’s business, while it has also won one project each in metro rail and urban bus transportation.


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IL&FS Transportation IPO In January; Trikona Trinity To Sell Stake

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