A new entrant into the primary market in a bid to raise funds is HG Infra Engineering. The company’s initial public offering (IPO) is set to open on Monday (February 26, 2018) and will close on February 28, 2018.
HG Infra Engineering said it has garnered over Rs 138 crore from anchor investors ahead of its initial share-sale.
The IPO committee has finalised allocation of 51,33,150 equity shares to as many as 11 anchor investors at Rs 270 apiece, also the upper price band for the offer, the company informed the stock exchanges. At this price, the total amount works out to be Rs 138.59 crore, it added.
Among the anchor investors are SBI Infrastructure Fund, DSP BlackRock India Tiger Fund, UTI – Infrastructure Fund and IDFC Infrastructure Fund.
Moneycontrol brings you 10 things to know about the issue.
HG Infra Engineering (HGIEL) is an infrastructure construction company focused on road projects. Its core business operations include providing EPC services on fixed-sum turnkey basis, ICICI Securities said in a report.
The firm is engaged primarily in execution of infrastructure sector projects like highways, roads & bridges and military engineering services (MES). The company also executes other civil construction projects like extension & grading of runways, railways & land development, according to its website.
About the Issue
The issue priced in the range of Rs 263-270 apiece will open on February 26 and will close on February 28, 2018.
The IPO, which will close on February 28, consists of a fresh issue of up to Rs 300 crore and an offer for sale of up to 60 lakh equity shares.
The offer for sale comprises selling of up to 10 lakh shares each by Harendra Singh, Vijendra Singh and Girish Pal Singh; and up to 30 lakh shares by Hodal Singh, the promoter group selling shareholder.
The company aims to raise Rs 462 crore through the issue at a price of Rs 270 per share.
Objects of the Issue
With this money raised, it plans to use it for purchasing capital equipment; repayment of debt and general corporate purposes
According to a report by HDFC Securities, factors such as establish infra player with an efficient business model, along with strong project management and execution capabilities are seen as some of the strengths. Additionally, visible growth through growing order book and improved pre-qualification credentials are likely to tilt in favour of this firm.
Promoter and Management
The company has six directors on the Board, comprising two executive directors, one nonexecutive director and three independent directors, including one woman director. The chairman of the Board, Harendra Singh is an Executive Director.
Board of Directors
Risks and Concerns
According to the Red Herring Prospectus, here are few of the listed risks mentioned by the company.
– Delays in the completion of construction of current and future projects could lead to termination of EPC contracts or cost overruns or claims for damages, which could have an adverse effect on our cash flows,
– There is an outstanding litigation involving our Company, which, if determined adversely, may affect our business and operations and our reputation.
– Our business is dependent on a few customers and the loss of, or a significant reduction in award of contracts by such customers could adversely affect our business.