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Sadbhav Infrastructure refiles DRHP for IPO; Xander, Norwest cuts offer-for-sale size

28 May, 2015

Sadbhav Infrastructure Project Ltd, which withdrew its documents to float its initial public offer (IPO) last Friday, has refiled its draft red herring prospectus (DRHP) with Securities Exchange Board of India (SEBI) for the public issue. It has now cut the size of fresh issue of shares as well as the quantum of shares offered for sale by its existing private equity backers Xander and Norwest Venture Partners.

The firm is now looking to raise Rs 425 crore ($66.5 million) through fresh issue of shares in its initial public offer (IPO) as against the previous proposal where it sought to raise Rs 600 crore (just under $100 million then).

Last December when it has filed its DRHP for IPO, both Xander and Norwest Venture Partners were looking to sell around half of their shares as part of an offer-for-sale. Now they have also pruned the number of shares they plan to sell with Xander offering to sell a quarter of its holding and Norwest just around a sixth.

An email query sent to company’s spokesperson for more information on the new proposal, did not elicit any response till the time of filing of this article.

Here’s a snapshot of the new issue and the firm

* Issue of fresh shares to garner Rs 425 crore; Xander has separately offered to sell 8.1 million shares while Norwest is offering up to 4.8 million shares.

* 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 fund of Norway among its shareholders.

* Book running lead managers: Kotak Mahindra Capital, ICICI Securities, Inga Capital, Edelweiss and Macquarie. Yes Bank, which was also one of the bankers in the previous proposal, is not involved in the IPO.

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 March 31, 2015, its subsidiary has completed 13 check posts and is developing nine more.

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

Financials

For the nine-months ended December 31, 2015, its consolidated revenue from operations was pegged at Rs 374.5 crore while net loss was Rs 223.17 crore. It had ended FY14 with net revenues of Rs 371 crore with net loss of RS 155.9 crore.

Objects of issue

The money raised from fresh issue, will be utilised to repayment of its loans and to part financing of its subsidiary SUTPL’s project. In the previous proposal it sought to pay back Rs 240 crore in unsecured loans from its parent. Now it will shell out only Rs 85 crore for the same. This also explains the cut in issue size.

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 part of of their holding in the IPO through an offer for sale.


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Sadbhav Infrastructure refiles DRHP for IPO; Xander, Norwest cuts offer-for-sale size

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