State-run companies Mazagon Dock Ltd and Rail Vikas Nigam Ltd as well as Tata Opportunities Fund-backed Varroc Engineering Ltd filed draft proposals for initial public offerings, as the rush of companies looking to float share sales continues unabated.
The government will pare its stake in warship maker Mazagon Dock and the railway project implementation firm as part its disinvestment target for the forthcoming fiscal year.
The government will sell 22.41 million shares in Mazagon Dock and a little more than 208.5 million in RVNL, excluding any shares reserved for employees. This will result in a little more than 10% stake dilution in the two companies.
The IPO of Varroc Engineering comprises only a sale of shares by its private equity investors.
These filings add to the more than two dozen firms that are looking to go public in the next 12 months to benefit from the recent stock market boom and flow of household savings and liquidity into financial markets. The fundraising is also targetted at letting private equity and venture capital firms exit their portfolio firms.
Companies across a range of sectors from renewable energy and restaurants to online gaming and seafood processing are preparing to float initial public offerings.
Here’s a snapshot of the proposed IPO by Mazagon Dock:
Issue
The government has proposed to sell a little more than 22.41 million shares, out of 224.10 million shares it owns, to raise as much as Rs 1,500 crore.
The IPO will result in a stake dilution of roughly 10.5%. The government will get three years from the date of listing to trim its stake to 75% or below as part of SEBI's minimum public float norms.
Use of Proceeds
The company will not receive any proceeds from the offer. The money will go in the government’s kitty.
Bankers
Yes Securities (India), Axis Capital, Edelweiss Financial Services, IDFC Bank and JM Financial are the merchant bankers managing Mazagon Dock’s IPO.
Lawyers
DSK Legal, Advocates & Solicitors and Riker, Danzig, Scherer, Hyland & Perretti, LLP are India and international legal advisers to the company and government on the public issue.
Cyril Amarchand Mangaldas is representing the merchant bankers on the IPO.
Company
Mazagon Dock operated as a small dry dock in Mazagaon village in Mumbai to service the ships of the British East India Company in 1774. The dock was subsequently developed into a ship repair yard and later a ship building yard over the course of two centuries.
The company was incorporated as a private firm in 1934, and was acquired by the government in 1960 to expand its warship development programme.
The company constructs and repairs warships and submarines for use by the Indian Navy and other vessels for commercial clients. It has a maximum shipbuilding and submarine capacity of 40,000 dead weight tonnage (DWT).
Mazagon Dock is India’s only shipyard to have built destroyers and conventional submarines for the Indian Navy, besides being one of the initial shipyards to manufacture Corvettes.
The company operates under two verticals: One is shipbuilding, under which it builds and repairs naval ships, and second is submarine and heavy engineering, which includes building and repairing diesel electric submarines.
Mumbai-based Mazagon Dock is currently building four P-15 B destroyers and four P-17A stealth frigates for the Ministry of Defence for use by the Indian Navy. It is also building five Scorpene class submarines under a transfer of technology agreement with Naval Group.
Since 1960, the company has built 795 vessels, including 25 warships, from advanced destroyers to missile boats and three submarines, besides delivering cargo ships, passenger ships, supply vessels, multipurpose support vessels, water tankers, tugs, dredgers, fishing travellers, barges and border outposts for various customers in India as well as abroad.
Its order book stood at Rs 52,760.8 crore as on February 2018.
Financials
The company reported consolidated net profit of Rs 285.79 crore for the six months ended September 2017 on revenue (from operations) of Rs 1,751.4 crore.
For fiscal 2016-17, the company’s net profit was Rs 595.62 crore on revenue of Rs 3,530.48 crore.
Here’s a snapshot of the proposed IPO by RVNL:
Issue
The government has proposed to sell a little more than 208.52 million shares out of the 2.085 billion shares it owns.
The public offer will result in a stake dilution of roughly 10.5%. The government will get three years from the date of listing to trim its stake to 75% or below as part of SEBI minimum public float norms.
Use of Proceeds
The company will not receive any proceeds from the offer. The money will go in the government’s kitty.
Bankers
Yes Securities (India), Elara Capital (India) and IDBI Capital Markets & Securities are the merchant bankers managing RVL’s IPO
Lawyers
DSK Legal and Riker, Danzig, Scherer, Hyland & Perretti, LLP are India and international legal advisers to the company and government on the public issue.
Verist Law is representing the merchant bankers on the IPO.
Company
RVNL was incorporated in January 2003 by the Ministry of Railways as a project executing agency working for and on the ministry’s behalf.
The company executes all types of railway projects including new lines, gauge conversion, railway electrification, metro projects, workshops and major bridges.
Since its inception, the ministry has transferred 172 projects to the company. Of these, 166 projects are sanctioned for execution. Out of these, 60 projects have been fully completed and the balance are in progress.
The company has an order book of Rs 68,683.62 crore as on February 2018.
As on fiscal 2016-17, the company claims to have completed projects spanning length of 713.73 route kilometres.
Its key business operations are laying of new rail network lines, doubling of existing routes, gauge conversions, railway electrification, setting up metro lines and suburban networks in metropolitan cities, repair workshops and miscellaneous areas including construction of car sheds, construction of bridges and subways.
RVNL’s major client is the Indian Railways. Other key clients include various central and state government ministries, departments and public-sector undertakings.
Financials
The company reported a net profit of Rs 235.93 crore for the six months ended September 2017 on revenue (from operations) of Rs 3,245.48 crore.
For fiscal 2016-17, the company’s net profit was Rs 443.48 crore on revenue of Rs 5,915.1 crore.
Here’s a snapshot of the proposed IPO by Varroc Engineering:
Issue
The offer comprises a sale of 18.53 million shares. The public issue will result in 13.75% stake dilution on the post-issue basis.
The IPO size is estimated at Rs 2,500-3,000 crore.
Singapore-based private equity firm Omega TC Holdings Pte Ltd and Tata Capital Finance Services will sell bulk of their holding in the IPO.
Omega will sell 15.37 million shares out of the 16.91 million it holds. The Tata fund will sell 1.41 million shares out of the 1.55 million shares it owns. Promoter Tarang Jain is selling a small chunk of shares.
Use of Proceeds
The company will not receive any proceeds from the offer, and the money will go to the promoter and existing private equity shareholders.
Bankers
Kotak Mahindra Capital Co, Citigroup Global Markets India, Credit Suisse Securities (India) and IIFL Holdings are the merchant bankers managing Varroc Engineering’s IPO.
Lawyers
Khaitan & Co is the legal counsel representing the company and the promoter Jain.
AZB & Partners is the legal adviser to international selling shareholders.
Shardul Amarchand Mangaldas & Co and Clifford Chance are India and international legal counsel representing the merchant bankers on the IPO.
Company
Varroc Engineering was incorporated in May 1988 and commenced operations of its polymer business two years later. The company diversified into India’s second-largest auto component group by revenue.
It is the sixth-largest global exterior automotive lighting manufacturer and one of the top three independent exterior lighting players.
The company designs, manufactures and supplies exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off-highway vehicle manufacturers directly worldwide.
The company attributes its growth to various investments, joint ventures and acquisitions in the past decade. Most notably, it acquired NYSE-listed Visteon's global lighting business in 2012.
Prior to the acquisition of Visteon's global lighting business, the company had acquired I.M.E.S (a manufacturer of hot steel forged parts for the construction and oil and gas industries) in Italy in 2007. It also acquired Triom (a manufacturer of high-end lighting systems for global motorcycle makers) with operations in Italy, Romania and Vietnam in 2011.
Through its Visteon acquisition, the company acquired the firm’s 50:50 joint venture with Beste Motor Co. Ltd in 2013 to manufacture automotive lighting in China.
Last month, the company entered into a joint venture with Dell'Orto S.p.A.to develop electronic fuel injection control systems for two-wheelers and three-wheelers.
Varroc has 36 manufacturing facilities spread across seven countries, with six facilities for global lighting business, 25 for its India business and five for other businesses. In addition, it has five R&D centers in India.
The company aims to set up one manufacturing facility in Brazil and one manufacturing facility in Morocco, as well as two manufacturing facilities in India.
Varroc counts several top global automotive companies as its key clients. These include Ford, Jaguar Land Rover, Volkswagen Group, Renault-Nissan-Mitsubishi and Groupe PSA. In India, the company has long-standing business relationship with Bajaj Auto Ltd.
Financials
The company reported consolidated net profit of Rs 307.95 crore for nine months ended December 2017 on revenue (from operations) of Rs 7,393.90 crore.
For fiscal 2016-17, the company’s net profit was Rs 303.38 crore on revenue of Rs 9,608.54 crore.
