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Sadbhav Infra files DRHP to raise around $100M in IPO; Xander, Norwest to part-exit

05 December, 2014

Sadbhav Infrastructure Project Ltd, an infrastructure sector player primarily involved in the development of highways and road projects, has filed its draft red herring prospectus to raise Rs 600 crore (just under $100 million) through fresh issue of shares in its initial public offer (IPO). In addition, the proposed issue would see both its private equity investors Xander and Norwest Venture Partners part-exit their four-year-old investment, which would make the overall issue size much bigger than $100 million.

This makes it yet another PE-backed firm to tap on to the buoyant public market to float an IPO after Manpasand Beverages, Adlabs Entertainment, PNC Infratech, Ortel, Uniparts, CL Educate, ACB and Power Mech Projects.

Some like Sharda Cropchem, Snowman Logistics and Monte Carlo have already seen through their public issues.

Here’s a snapshot of the issue and the firm

* Issue of fresh shares to garner Rs 600 crore; Xander and Norwest offer 16.17 million shares each or half of their holding.

* Company is majority owned by public listed firm Sadbhav Engineering which is into engineering, construction and development of infrastructure projects. Promoted by the Patel family, Sadbhav Engineering counts sovereign funds of Norway and Kuwait among its shareholders.

* Book running lead managers: Kotak Mahindra Capital, ICICI Securities, Inga Capital, Yes Bank, Edelweiss and Citibank.

Company

Started in 2007, it specialises in roads related build-operate-transfer (BOT) projects. All projects are implemented and held through special purpose vehicles, including joint venture entities.

Its operations are spread across Maharashtra, Gujarat, Rajasthan, Karnataka, Haryana, Madhya Pradesh and Telangana besides border check posts in the state of Maharashtra.

Its project portfolio consists of 10 BOT projects of which six road projects are fully operational, one is the partially operational border check posts and the remaining three projects are in various stages of development. Nine of the 10 BOT projects are toll projects (including service fee for the border check posts in Maharashtra), while the remaining one is an annuity project.

Its operational projects cover approximately 1,534.44 lane kms and the projects under development cover approximately 1,061.48 lane kms. In addition, as of September 30, 2014, its subsidiary has completed 13 check posts and is developing 9 more.

In addition to the above projects, it has initiated the process to acquire from its listed parent, stakes in three projects.

Its promoter Sadbhav Engineering has over 25 years of experience in construction activities in the transport, mining and irrigation sectors.

Financials

For the year ended March 31, 2014, its consolidated revenue from operations and net loss amounted to Rs 374. 4 crore and Rs 151.7 crore, respectively. For the three months ended June 30, 2014, its consolidated revenue from operations and net loss amounted to Rs 120 crore and Rs 67.38 crore, respectively.

Objects of issue

The company is eyeing gross proceeds of Rs 600 crore through fresh issue of shares in the IPO. Bulk of this money will go to repay its debt. While Rs 240 crore will go for part repayment of unsecured loans from its parent Sadbhav Engineering, another Rs 180 crore will go towards repayment of loan from ICICI Bank.

It plans to use another Rs 102.8 crore to back its project subsidiary to part finance its project. The remaining amount could be raised under ‘general corporate purposes’.

Investors

Sadbhav Infrastructure had raised Rs 200 crore each from Xander and Norwest Venture Partners in 2010. Both the investors currently own 10.41 per cent stake each and are selling half of their holding in the IPO through an offer for sale. The pricing of the proposed issue is not yet frozen so the expected returns cannot be generated. Watch out this space for more on the IPO.

(Edited by Joby Puthuparampil Johnson)


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Sadbhav Infra files DRHP to raise around $100M in IPO; Xander, Norwest to part-exit

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