Ahmedabad-based construction company PSP Projects Ltd has filed a draft prospectus with the Securities and Exchange Board of India (SEBI) for an initial public offering.
The IPO comprises fresh issue of up to 7.2 million shares besides giving part exit to the company’s founders through a secondary market sale of 2.88 million shares, according to the prospectus.
The public issue is estimated to be worth Rs 225-250 crore ($33-36.7 million), said a banker working on the mandate.
PSP Projects joins other infrastructure and construction firms such as GR Infraprojects Ltd and Shankara Building Projects Ltd in looking to go public. GR Infraprojects and Shankara Building have received SEBI approval for their IPOs.
Other infrastructure firms that went public in the past year or so include Sadbhav Infrastructure Project Ltd, PNC Infratech Ltd, MEP Infrastructure Developers Ltd and Dilip Buildcon Pvt. Ltd.
Snapshot of the IPO
Issue: Back-of-the-envelope calculation indicates a fresh issuance of shares estimated to be worth Rs 160-170 crore, in addition to an offer for sale of shares worth about Rs 65-71 crore by the company’s founders and their family members.
The total IPO constitutes about 28% of the post-offer equity, according to the prospectus.
Bankers: Karvy Investment Banking and Motilal Oswal Investment Banking are managing the issue.
Use of proceeds: The company will use Rs 63 crore toward working capital requirements, Rs 51 crore to meet capital expenditure requirements and an undisclosed amount for general corporate purposes.
Company
PSP Projects offers a range of construction and allied services across industrial, institutional, government, government residential and residential projects in India.
It was incorporated eight years ago by chairman, managing director and CEO Prahaladbhai Shivrambhai Patel, who has been in the construction business for over 30 years.
The company provides services across the value chain, ranging from planning and design to construction and post-construction activities, to private and public-sector enterprises. Historically, it has focused on the Gujarat region. PSP is looking to diversify into other regions and is taking up projects across India.
The company claims it completed the construction of the GCS Medical College, Hospital and Research Centre (managed by the Gujarat Cancer Society) in June 2012 as one of its marquee projects. It has executed a number of projects including the construction of the Zydus Hospital at Ahmedabad and various works related to the Sabarmati Riverfront Development project in Ahmedabad.
Since its incorporation in August 2008, PSP Projects has executed 71 projects as of 30 November 2016.
Financials
PSP Projects reported a net profit of Rs 13.45 crore on consolidated revenue (operations) of Rs 192.66 crore for the six months ended September 2016.
For full year 2015-16, the company reported a net profit of Rs 22.63 crore on revenue of Rs 475.97 crore, as per the prospectus.
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