Power Mech IPO gets off to a slow start after raising $13M from anchor investors

Hyderabad-based power infrastructure service provider Power Mech Projects Ltd has raised Rs 82 crore (approximately $13 million) from a bunch of domestic and foreign investors that have come as anchor investors ahead of its proposed initial public offer which opened for subscription on August 7.

The power infrastructure firm has allotted 1.28 million equity shares at a share price of Rs 615 to seven anchor investors, including DSP Blackrock India Tiger Fund, Morgan Stanley Mauritius, HDFC Asset Management Company, IDFC Asset Management Company, Tata AIA Life Insurance Company, etc.

The anchor investors picked the shares at the lower end of the Rs 615-640 price band for issue.

Power Mech would be able to raise up to Rs 191 crore from the issue which is open to public shareholders.

At the end of day 1, under 7 per cent of the issue was subscribed with primarily retail investors bidding for about 12 per cent of the shares reserved for them.

The overall public issue comprises 4.27 million shares, including an offer for sale by Motilal Oswal Private Equity (PE) of around 2.14 million shares. Of the total issue size, half will go to provide a partial exit to the PE investor.

Motilal Oswal PE had invested Rs 40 crore in the company in tranches starting in 2009 and currently holds 19.89 per cent stake. It is selling over four-fifths of its holding in the IPO and will own 2.55 per cent stake after the issue.

Power Mech is into power infrastructure services and provides erection, testing and commissioning of boilers, turbines and generators and balance of plant works, civil works and operation and maintenance services.

Between FY10 and FY14, its total income increased at a CAGR of 39.37 per cent from Rs 321 crore to Rs 1,211 crore. Its profit after tax for FY14 was Rs 68 crore.

Kotak Mahindra Capital, India Infoline and Motilal Oswal are managing the issue.

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