The initial public offering of construction firm Capacit’e Infraprojects Ltd sailed through on the first day of the issue on Wednesday thanks to strong demand from institutional as well as retail individual investors.
The offering of 11.42 million shares—excluding the anchor allotment—received bids for 14.81 million shares, or 1.3 times, at the end of day one, stock-exchange data showed.
Retail investors, who cannot bid more than Rs 2 lakh, offered to buy 1.55 times the 5.71 million shares reserved for them. The institutional buyers’ quota was covered 1.8 times the 3.26 million shares on offer.
The portion set aside for non-institutional investors, comprising corporate bodies and wealthy individuals, was covered about 10%, data showed.
The Mumbai-based company, which counts Paragon Partners and NewQuest Capital Partners as its private equity backers, on Tuesday raised Rs 120 crore by selling shares to a bunch of anchor investors at the upper end of the Rs 245-250 apiece price band, according to a stock-exchange filing.
The anchor allotment saw participation from global institutions such as Goldman Sachs, HSBC and BlackRock besides a few Indian asset managers and private life insurance firms.
Anchor investors, or cornerstone investors, are institutional investors who accept a one-month lock-in period for a sizeable allocation of shares to support a public offering. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.
Capacit’e is the second company this year whose public offering was fully covered on the first day, after Avenue Supermarts Ltd, which runs hypermarket chain D-Mart.
D-Mart’s Rs 1,870-crore IPO is the most successful initial share sale of 2017. The issue was subscribed 105 times and yielded 265% returns following a blockbuster listing in March.
Capacit’e Infraprojects is looking to raise Rs 400 crore ($62.5 million) through the public issue, which is entirely a fresh offering. Existing shareholders, including private equity investors, will not offload any of their holdings.
The company is seeking a valuation of Rs 1,697.28 crore in the IPO. The sale will result in a 23.56% stake dilution on a post-issue basis at the upper end of the price band.
While Paragon’s stake will dilute from 15.68% to 11.98% after the IPO, NewQuest’s stake will reduce to 9.74% from 12.75%. The stake of the company’s promoters will drop to 43.78% from 57.29%.
Axis Capital, IIFL Holdings and Vivro Financial Services are merchant bankers managing the IPO.
The company had filed its draft red herring prospectus with the Securities and Exchange Board of India on 17 April. It had received regulatory nod for the IPO on 9 June.
Capacit’e constructs buildings, including high-rise structures, and factories, for large real estate developers, corporate houses and institutions. It has more than 1,000 personnel across multiple projects in Mumbai, Delhi-NCR and Bengaluru. Its order book stood at more than Rs 4,000 crore as of 31 January.
The company joins several infrastructure and construction firms that have gone public in the last 18 months, such as Shankara Building Projects Ltd, Sadbhav Infrastructure Project Ltd, PNC Infratech Ltd, MEP Infrastructure Developers Ltd and Dilip Buildcon Pvt. Ltd.
Paragon Partners
The private equity fund was floated by Siddharth Parekh to provide growth capital to mid-market companies in India. It has a target corpus of $200 million.
Siddharth, the younger son of Housing Development Finance Corp chairman Deepak Parekh, had floated Paragon Partners Growth Fund I (PPGF-I) in 2015 in partnership with Sumeet Nindrajog.
Its advisory board includes Deepak Parekh, chairman, HDFC Ltd; Harsh Mariwala, chairman at Marico Ltd; Sunil Mehta, chairman at state-run Punjab National Bank; and Jeff Serota, former senior partner at Ares Private Equity.
It is registered as a Category II fund under SEBI’s AIF norms that straddles sector-agnostic and real estate-focussed private equity funds. The focus is on five key sectors, including consumer discretionary, financial services, infrastructure services, industrial and healthcare services.
In June last year, it had raised $50 million to mark the first close of the fund. It has also received commitment from India Infoline, Edelweiss Group, Infina Finance and Canada-based Fairfax group.
VCCircle was the first to report, in 2015, that Paragon was to invest Rs 63 crore in Capacit’e. It had sealed the deal through compulsorily convertible preference shares, which were to be used for working capital requirements.
In 2016, NewQuest and Paragon, along with other private institutions, including Infina, had invested about Rs 60 crore in Capacit’e. NewQuest infused Rs 40 crore while Paragon put in Rs 9.99 crore.
Infina Finance, an investment company jointly owned by Kotak Mahindra Bank and the Kotak family, is a limited partner in Paragon Partners.