PE-backed PNC Infratech and VRL Logistics get SEBI’s approval for IPO

Agra-based infrastructure firm PNC Infratech Ltd (PNC) and Hubballi-based VRL Logistics Ltd have received a green signal from capital markets regulator Securities and Exchange Board of India (SEBI) for their proposed initial public offer (IPO) last week.

They join the queue of PE-backed firms all set for a public float. The uptick in the stock market has prompted a slew of firms to file for IPOs. Other PE-backed companies which have received SEBI's nod for their public issues include Ortel Communications, Adlabs Entertainment and ACB. Several others have filed their DRHPs and are awaiting a green signal for their IPOs.

In both PNC Infratech and VRL Logistics, the PE investors are looking to part exit.

PNC Infratech

PNC Infratech, which specialises in construction of highways, bridges, flyovers and airport runways, had filed draft red herring prospectus with SEBI to raise as much as Rs 530 crore ($85.4 million) in Sept 2014. This will also provide a partial exit to Jacob Ballas.

Mid-market PE investor Jacob Ballas is selling a little over a fifth of its holding and may clock 1.5x in returns on its investment, as per VCCircle estimates.

The company would use Rs 150 crore to fund working capital requirements besides putting in Rs 35.2 crore to repay certain debt. In addition, it plans to use Rs 65 crore to invest in a subsidiary, PNCRHPL for part-financing the Raebareli-Jaunpur project in addition to Rs 103 crore planned investment in capital equipment.

ICICI Securities is acting as the banker in the process.

In 2009, PNC Infratech planned to raise Rs 175 crore through IPO but later in 2011, the company withdrew its plan due to poor market conditions.

VRL Logistics

VRL Logistics had filed the draft red herring prospectus with SEBI to raise over Rs 142 crore ($22.9 million) via IPO in Dec last year. This was the second time that the logistics firm filed its DHRP. Earlier it filed in December 2010 but did not go ahead with the IPO.

The firm is looking to raise money through a fresh issue besides an offer for sale of 17.1 million shares by its private equity investor & promoter New Silk Route (NSR).

Of the proceeds from the fresh issue of shares, the firm would use Rs 83.1 crore for purchase of goods transportation vehicles and Rs 35 crore for repayment/pre-payment, in full or part, of certain debt.

VRL is a pan-India surface logistics and parcel delivery service provider. The firm's operational infrastructure for the goods transportation business comprised 603 branches (comprising 583 leased branches and 20 owned branches) and 346 agencies across India, and of such 603 branches, 48 (41 leased branches and seven owned branches) served as strategic transshipment hubs as of September 30, 2014.

NSR owns 19.25 million shares representing 22.5 per cent stake in VRL and is divesting over two-thirds of this comprising around 14.55 million shares in the offer for sale.

The PE firm had put in around Rs 160 crore to buy the stake in 2011-12. It invested Rs 110 crore through a preferential allotment and bought shares worth Rs 50 crore from one of the promoters.

Sankeshwars, the promoters of VRL Logistics, are also selling a small chunk of shares as part of the secondary offering.

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