Nikhil Gandhi-promoted SKIL Infrastructure Ltd has filed draft red herring prospectus (DRHP) with market regulator Sebi for a Rs 1,125 crore initial public offering. Backed by private investment firm like Pinebridge (earlier AIG's Private Equity arm), SKIL Infrastructure has interests in areas like ship-building, education and defense. SKIL Infrastructure is also considering a pre-IPO placement of up to Rs 225 crore.
According to VCCircle estimates, Mumbai-based SKIL Infra could be looking at a post-issue valuation of over Rs 12,000 crore.
Rs 800 crore from the issue proceeds will go towards retiring high-cost debt of the company, which stood at Rs 1,351 crore as of March 31, 2011. Around Rs 150 crore from offering will be used for its inorganic growth strategy. SKIL Infra is exploring possible acquisitions of companies in sectors like education, infrastructure and defence industries.
Edelweiss Capital, JM Financial, Nomura, SBI Capital Markets and ICICI Securities are the lead bankers to the issue.
PineBridge Investments, through its entities Ashoka Investment Holdings Ltd and Ambadevi Mauritius Holding Ltd, had subscribed preference shares worth Rs 200 crore in 2008 in the company. These preference shares, now accounting for a 8.3% stake, were converted into equity shares in May at a cost of Rs 78.99 per unit. Going by recent preferential allotments at Rs 360 per share, this represents a 4.5x return.
PineBridge Investments was part of the investment advisory and asset management businesses of AIG and in March 2010 acquired by Pacific Century Group (PCG), an Asia-based private investment group. While PineBridge is not offloading any shares in the public offering, its stake also does not come under lock-in.
IFCI also recently converted optionally convertible debentures worth Rs 200 crore at a cost of Rs 245 per share. The firm holds a 2.74% stake.
SKIL Infrastructure has expanded its presence into the education sector and consolidated its positions in the ship-building space in 2010. A major chunk of the debt was used to fund these deals.
SKIL Infra acquired a 19.43% stake in its flagship Pipavav Shipyard from its partner, engineering and construction firm Punj Lloyd, for Rs 656.4 crore ($145 million). SKIL's stake increased to over 43% after the deal and a subsequent open offer.
SKIL also forayed into the education sector by picking up a 21% stake in Chennai-based Everonn Education Ltd for Rs 208.4 crore. After this deal, SKIL became a co-promoter in Everonn, a fully integrated knowledge management, education and training firm.
Besides, it also took a 26.09% stake in New Horizons India Limited in November 2010 for Rs 61.65 crore. New Horizons is an unlisted educational and training company that offers services in the areas of IT, vocational and domain skills training, technology services and supplementary education. In February SKIL sold a 7.05% in New Horizons to a promoter-controlled company at cost.
It has also tied up with University of Strathclyde and V.S. Educational Society to establish Strathclyde SKIL Business School, will focus on developing postgraduate and undergraduate programs in business and management.
Besides the firm also holds stakes in special economic zones in Mumbai, Navi Mumbai and Oman. SKIL is also planning to develop a coal-based 660 MW thermal power plant in Maharashtra with Germany's Evonik.
SKIL Infrastructure had a total income of Rs 8.4 crore for the 12 month period ending December 2010 with a net loss of over Rs 150 crore.
Horizon Country Wide Logistics
SKIL Infrastructure operates in the logistics space through Horizon Country Wide Logistics Limited, which is involved in creating logistics infrastructure through a hub-spoke model by developing an integrated pan-India network of multi-modal logistics park. This includes building container freight stations, inland clearance depots, free trade warehousing zones and warehousing facilities at strategic locations such as ports, entry and exit points of the Golden Quadrilateral.
SKIL has a 46.4% stake in Horizon, which operates through two subsidiaries, Fastlane Distriparks & Logistics Limited and Chiplun FTWZ Private Limited. AIM-listed private equity firm Trinity Capital holds nearly 23% stake in Horizon Country Wide through Trinity Capital (Four) Limited.
Trinity had invested around Rs 84 crore (£ 11.2 million) in Horizon Country Wide in October 2008 and has subsequent entered into a put option (right to sell) by September 2013. This option could be exercised if SKIL does provide Trinity an exit either through an IPO or Horizon's merger with any other listed entity (including group firms) by September 2013.
The put option can be exercised at Rs 22 per share, a 25% discount as compared to Trinity's subscription price of Rs 29.11 per share. Trinity Capital also held a stake in Pipavav Shipyard, which it completely exited at 3.6x multiple in October 2010. SKIL's subsidiary Karanja Infrastructure had earlier acquired the stake held by Citadel and Credit Suisse in Horizon Country Wide.