Rakesh Jhunjhunwala-backed John Energy gets SEBI nod for IPO
Photo Credit: Mukul Mudgal/VCCircle

Ahmedabad-headquartered oilfield services firm John Energy Ltd, backed by ace investor Rakesh Jhunjhunwala, has received regulatory approval to float an initial public offering.

The Securities and Exchange Board of India (SEBI) issued final observations on John Energy’s IPO proposal on 27 April. This makes it the 15th company to receive regulatory clearance for an IPO in 2018.

In 2017, 46 companies had received approval for IPOs, according to the SEBI website.

The company, which also counts private equity firm Sage Capital among its key investors, had filed its draft proposal on 16 February.

The IPO will comprise a fresh issue of shares worth Rs 218 crore and a sale of 1.67 million shares by existing shareholders. Sage Capital, which invested in John Energy through its arm India Rig Co., will sell 800,000 shares out of the 2.86 million shares it holds.

According to the draft red herring prospectus, non-banking financial firm IL&FS Financial Services Ltd will sell about 580,000 shares in the IPO while individual shareholders will cumulatively sell 297,000 shares.

Billionaire investor Jhunjhunwala is the second-largest investor in the company, holding an 18.21% stake. Mahesh N Vyas, chairman and managing director, is the biggest shareholder, with a 20.95% stake. Jhunjhunwala had invested Rs 50 crore in the company through RARE Enterprises in 2007.

Sage Capital had invested Rs 90 crore in the company in 2010, of which Rs 75 crore was via fresh shares and the remaining by buying shares from the promoters. The fund infusion by Sage Capital followed the company’s decision to scrap its IPO plans for 2010-11.

The company will use Rs 164 crore of the fresh net proceeds to repay debt. It has also proposed to use an undisclosed amount towards general corporate purposes.

IDFC Bank and Keynote Corporate Services are the merchant bankers managing the IPO.

Incorporated in 1987, John Energy serves more than 2,500 oil wells. The company counts Oil & Natural Gas Corporation, Reliance Industries Ltd and Gujarat State Petroleum Corporation among its clients. Its offerings include land-based drilling, well completion, work-over drilling, integrated-contract services, gas compression and processing, including gas dehydration, to companies engaged in onshore exploration, development and production of oil and gas.

The company owned a fleet of 34 rigs comprising 19 drilling rigs and 15 work-over rigs as on end-December 2017.

Besides, the company offers integrated contract services to upstream players whereby it bundles various services like drilling fluid, mug loggings, wire line logging, cementing, casing, well-head completion, and surface facility.

It also offers midstream services such as natural-gas compression and natural-gas dehydration to players engaged in the production and transportation of the fuel in India.

John Energy owns five gas-compressor units. The company recently ventured into gas dehydration, a relatively new business segment in India. The move was primarily triggered by gas leakage in state-owned energy player GAIL’s KG-Basin pipeline in the East Godavari district of Andhra Pradesh in June 2014.

John Energy reported a consolidated net profit of Rs 16.33 crore for the six months through September 2017 on consolidated revenue from operations of Rs 228.28 crore.

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