Construction company Dilip Buildcon Ltd’s initial public offering started on a slow note on Monday with investors bidding for only 9% of the shares on offer at the end of the first day.
Retail investors led the subscription, bidding for 17% of the shares reserved for them, according to stock-exchange data.
Ahead of the IPO, the company sold 8.95 million shares to raise Rs 192 crore (about $29 million) from anchor investors including Small Cap World Fund, PGGM World Equity, Abu Dhabi Investment Authority, DB International, Nomura Singapore, East Bridge Capital and IDFC Infrastructure Fund.
The company, backed by private equity firm BanyanTree Growth Capital, sold the shares to the anchor investors at the upper end of its price band of Rs 214-219. The issue will close on August 3.
Bhopal-based Dilip Buildcon joins infrastructure companies Sadhbav Infrastructure Project Ltd, PNC Infratech Ltd and MEP Infrastructure Developers Ltd in floating IPOs in the past year. GR Infraprojects Ltd has picked bankers for its planned IPO while GVR Infra Projects Ltd is in the queue to float a public issue.
Dilip Buildcon’s IPO comprises a fresh issue to raise Rs 430 crore and an offer for sale of about 10.23 million shares. This includes an offer for sale of 1.13 million shares by the company's promoters Dilip Suryavanshi and Devendra Jain, and 7.95 million shares by BanyanTree.
The company will use the proceeds of the fresh share issue to repay loans, meet working capital requirements and for other corporate purposes.
Dilip Buildcon had initially filed its draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India (SEBI) in April last year. At the time, it sought to raise up to Rs 650 crore (then $104 million) via a fresh issue. BanyanTree was then looking for a complete exit by selling about 11.4 million shares, or a stake of around 9.75%; it had invested Rs 75 crore to buy just under 10% stake in the firm.
The company refiled its IPO documents with SEBI in February and cut the size of the fresh issue as well as the quantum of shares offered for sale by BanyanTree. It received SEBI approval for the revised proposal in March. The company is expecting a valuation of Rs 3,000 crore through the IPO.
Axis Capital Ltd, IIFL Holdings, JM Financial Institutional Securities and PNB Investment Services are managing the issue.
Founded in 1988, Dilip Buildcon provides engineering, procurement and construction services in the roads and irrigation sectors.
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