PME Power Solutions (India) Ltd, a Delhi-based firm backed by private equity firms Tano Capital and Subhkam Ventures, has filed its DRHP (Draft Red Herring Prospectus) with market regulator SEBI in which it will dilute up to 25 per cent stake. PME is involved in manufacturing transformers as well as engineering, procurement and construction (EPC) activities.
The firm is looking to raise over Rs 260 crore, according to the DRHP. This will imply a post-issue valuation of Rs 1,000 crore-Rs 1,200 crore. At this valuation, both the PE investors may be sitting on 4-4.5x unrealised gain on their investments, as per VCCircle estimates.
Tano Mauritius India FVCI had also invested Rs 25 crore in April last year and currently owns 12.95 per cent stake, with an average acquisition price of Rs 56.25 per unit. Subhkam Growth Fund I had invested in the company in October, 2007, and currently holds 4.67 per cent stake.
Edelweiss Capital and Imperial Corporate Finance are the book running lead managers to the issue.
PME Power Solutions manufactures transformers up to 63 MVA at the 132 KV class for applications which generate, transmit and distribute electricity. It also caters to other segments such as industrial applications, power plants, mining projects and arc furnaces. Last fiscal, the company entered the EPC projects space related to construction of substations for transmission & distribution of electric power and erection & commissioning of transmission & distribution lines.
The company’s expansion plans include setting up manufacturing facilities at Moradabad (Uttar Pradesh), to enhance its transformer production capability up to 315 MVA at the 400 KV class. This involves a capex of Rs 229 crore. The company also plans to repay part of its debt from the issue.
PME Power’s net revenue grew at a compound annual growth rate (CAGR) of 120 per cent from FY07 and reached Rs 412 crore in FY11, 75 per cent of which came from exports. During the same period, its net profit grew at a CAGR of 181 per cent to Rs 77 crore.
PME Power, earlier known as PME Transformers, had an order book of Rs 330 crore, which consists of Rs 37.5 crore for transformers and Rs 292.2 crore pertaining to EPC contracts, as of June 30, 2011. Around 97 per cent of the order book consisted of export projects.