The poor debut of new companies listing in the stock market continues with infrastructure firm A2Z Maintenance & Engineering Services Limited opening 2.5% below its issue price and in early trading hours quoting at Rs 345 per share 14% below the issue price. This follows poor listing debut of Carlyle- backed Claris Lifesciences and Zee Learn in the past week.
A2Z is a diversified infrastructure player backed by ace stock market investor Rakesh Jhunjhunwala and private equity firms Beacon India Private Equity Fund and India Equity Partners. Jhunjhunwala, who along with Beacon and few other promoter group individuals, sold a part of their shares in the IPO, is sitting on a windfall gain in his four-year-old investment in the company even at the latest price.
Jhunjhunwala invested around Rs 21 crore and held 21% stake pre-issue. He invested with the company’s valuation at just about Rs 100 crore compared to latest market cap of Rs 2,550 crore which means he is sitting with almost 25x returns in the four-year-old investment. Beacon invested around Rs 87 crore three years ago and owned 12% pre issue.
A2Z had revenue of Rs 1,225 crore with net profit of Rs 98 crore for the year ended March’10. The firm plans to use the money raised through the issue for investment in three biomass (bagasse)-based power cogeneration projects of 15 MW each in Punjab besides investment in five biomass-based power generation projects of 15 MW each in the Rajasthan, repayment of a loan granted by L&T Infrastructure Finance besides working capital requirements.
The company is into EPC services for the power transmission and distribution sector with a focus primarily on the distribution segment. It is diversifying the business to provide EPC services to power generation companies and companies in other sectors, including road and telecommunications.
A2Z has just acquired IL&FS Property Management & Services Ltd in a cash and stock deal through its subsidiary A2Z Infraservices Ltd for Rs 25 crore. While Rs 7 crore cash payment was made to IL&FS Infrastructure Equity Fund and IL&FS Employees Welfare Trust, it diluted 20% stake in A2Z Infraservices as a part of the deal. IL&FS Property Management had total revenues of Rs 90 crore in FY10.
A2Z has grown its facility management business through a number of small acqusitions. Earlier this year, it acquired a controlling stake in CNCS Facility Solutions Pvt. Ltd, a Mumbai-based facilities management services company.
A2Z raised Rs 675 crore through a fresh issue and another Rs 187 crore for selling shareholders, which would take the total issue size to Rs 862 crore. The issue was managed by as many as five BRLMs including IDFC Capital, BofA Merrill Lynch, Enam, ICICI Sec and SBI Caps. Yes Bank is the Co-BRLM to the issue.