Sterling & Wilson IPO sails through after company trims issue size
Photo Credit: VCCircle

The initial public offering of Sterling & Wilson Solar Ltd sailed through on the final day on Thursday after the company cut the issue size due to tepid demand.
The solar engineering and construction arm of Shapoorji Pallonji Group received bids for nearly 19 million shares for the IPO of 22.17 million shares, excluding the anchor portion. 

The portion set aside for qualified institutional buyers was subscribed 1.02 times. The quota reserved for non-institutional investors, such as corporate houses and affluent individuals, was subscribed nearly 90%. Retail individual investors, whose bid application cannot exceed Rs 2 lakh in value, bid for only 30% of the portion reserved for them.

Many domestic brokerage firms had advised clients to subscribe to the issue, but volatility in the global equity markets due to the escalating trade war between the US and China spooked investors. However, Indian shares staged a sharp recovery on Thursday after reports the government may offer some tax incentives to foreign institutional investors.

The IPO comprised a sale of 40.06 million shares by chief executive Khurshed Yazdi Daruvala and promoter entity Shapoorji Pallonji and Co. Pvt. Ltd. The IPO size was originally pegged at Rs 4,500 crore but was revised to Rs Rs 3,125 crore before the share sale opened.

The selling shareholders will now raise about Rs 2,850-2,875 crore, including the shares sold to anchor investors on Monday,  as per VCCircle estimates.

Sterling & Wilson’s IPO made a slow start on Tuesday and reached the one-third mark on Wednesday.
The company had trimmed its IPO size from its original  proposal and moderated its valuation expectations by nearly a third in the run-up to become the first Indian solar engineering and construction company to go public.

The company sought a valuation of Rs 12,508 crore ($1.81 billion) at the upper end of the Rs 775-780 per share price band. That’s lower than the estimated Rs 18,010 crore at the time of filing its draft prospectus in April this year.

Before Sterling & Wilson, ACME Group had filed a draft proposal to float an IPO for its solar power arm in September 2017 and was eyeing to be the first solar energy firm to go public. The company may file its IPO documents again owing to a change in valuations.

Two other renewable energy companies had also planned to go public but later shelved their plans. India’s largest green energy firm by capacity, ReNew Power Ltd, had filed its documents last May for a Rs 7,000-7,500 crore IPO. In February last year, Singapore infrastructure conglomerate Sembcorp Industries Ltd also filed for an IPO to list its India energy unit. Sembcorp dropped the IPO plan in June.

The IPO of Sterling & Wilson is being managed by ICICI Securities, Axis Capital, Credit Suisse, Deutsche Equities India, IIFL Holdings, SBI Capital Markets, IndusInd Bank and Yes Securities.

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