The initial public offering, the ₹5,430 crore IPO of Atal Tunnel and Chenab Bridge builder Afcons Infrastructure Limited, has opened for public subscription from October 25. The IPO will close on October 29 and the listing will take place on November 4.
In an interview given to Bhaskar ahead of the IPO listing, Afcons Infrastructure MD Paramsivan Srinivasan and the company's corporate strategy head Hitesh Kumar Singh shared several things related to the company and the IPO. Read the full interview…
When the company thinks it should launch an IPO, where will the funds raised from the issue be used? Hitesh Kumar Singh said – The company is constantly growing and needs funds for further growth. For this reason we have Rs. We have come up with an IPO of 5,430 crores. The company through a fresh issue of Rs. 1,250 crore will be received. Out of this Rs. 800 crore will be used to repay the company's loan, thereby reducing our interest rate.
While the working capital is Rs. 300 crore will be used. The rest of the money will go towards new machines, equipment and meeting other needs. While Rs 4,180 crore will go to our promoters Shapoorji Pallonji Group. Shapoorji Pallonji Group has also taken some loans, so it will use these funds to repay loans from vendors and banks.
What will be the share of the promoters after the IPO and what is the order book of the company? Paramsivan Srinivasan said – Even after the IPO, the promoters will remain the majority shareholders. Currently, the promoters hold 99.48% stake in the company. Our pending order book till March 2024 was around Rs 31,000 crore. This year from April 1, 2024 till now the company has received Rs. 19,000 crore new projects have been received.
Paramsivan Srinivasan, MD, Afcons Infrastructure Ltd.
Why was the IPO size reduced from ₹7,000 crore to ₹5,430 crore? Hitesh Kumar Singh said- Earlier the size of our IPO was Rs 7,000 crore. Then its size was increased to Rs. 5,430 crore was made. The reason for this is that before the IPO many large investors from India and abroad through secondary sale of the company raised about Rs. 2,970 crore shares have been purchased, hence the issue size has come down.
Anything special about the company that you would like to convey to investors? Afcons is one of the companies operating in all sectors of infrastructure. About 30% of the company's turnover comes from the international market. In the last 11 years and 3 months, the company has executed around 79 infrastructure projects in 17 different countries. Funds from the IPO will support the growth of the company.
What are the major projects the company has lined up after the Atal Tunnel-Chenab Bridge? Hitesh Kumar Singh said – 'AFCONS has done many big projects like Chenab Bridge, Atal Tunnel in the country and abroad. The company is known for undertaking large and timely projects. Our company is dedicated to taking the country's infrastructure story forward. Our company always focuses on doing large and complex projects.'
The Chenab Railway Bridge is the tallest single-arch railway bridge in the world. It is at an elevation of 1,178 feet above the river Chenab. It is built between Bakkal and Kauri in Reasi district of Jammu division of Jammu and Kashmir, India. It was inaugurated by PM Modi on 20 February 2024.
At present we are projecting high speed rail i.e. bullet train from Bombay to Ahmedabad. In this project, about 21 km long tunnel is being constructed from Bandra to Thane and this entire work is being done by our company. The highlight of the project is that out of this 21 km tunnel, about 7 km will be built under the sea.
Similarly, we have invested 500 million dollars i.e. Rs. 4,205 crore project. We will add four islands to this project. This is a strategic project. This is the biggest project of Maldives so far. The company is undertaking equally challenging projects at home and abroad.
Hitesh Kumar Singh, Head of Corporate Strategy, Afcons Infrastructure Limited.
What are the opportunities and challenges in the local and global markets? MD Paramsivan Srinivasan said – Most of our projects are funded by the Government of India or other governments. We do not face challenges in funding. However, many times we have to transport materials from one country to another, then in situations like covid or war, the logistics supply chain is affected. While this is sometimes a big problem in working abroad, there is none that big.
Where does most business come from in the local and global markets? 70% of our business is generated from India, the remaining 30% comes from International. 30% of this is generated from business, 20% from multilateral funds and 10% from private clients. For example we have been working with Reliance Industries for the past 25 years. Apart from this, we have also been working with the multinational company ArcelorMittal for the last 13-14 years. We work with such large private sector companies.
Of the company's 5 verticals, which business brings in the most revenue? We had a business of Rs 31,000 crore by 31 March 2024. About 37% of the business comes from underground and elevated i.e. metro business, 28% hydro business, 10% rail route business, 9% marine business and 6% oil and gas business.
If you too are thinking of investing in Afcons Infrastructure's IPO, we are giving you all the details of the issue and how much you can invest in it…
Retail investors can invest in the IPO till October 29 Afcons intends to raise ₹5,430 crore through this public issue by selling over 11.72 crore shares. The company will use the funds raised from the IPO to repay debt, purchase construction equipment, meet long-term capital requirements and general corporate purposes.
Retail investors can invest in the company's IPO till 29 October 2024. The company has set an IPO price band of ₹440-₹463 per equity share.
The company's shares will be listed on BSE-NSE on November 4 Afcons Infrastructure shares will be allotted on October 30, 2024. The shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on November 4.
Afcons Infrastructure's IPO is a mix of fresh issue and offer for sale This IPO of Afcons Infrastructure is a combination of fresh issue and offer for sale (OFS). Through the fresh issue, the company raised Rs. 1,250 crore will sell 2.7 crore shares.
While the existing shareholders and promoters of the company through OFS i.e. Offer for Sale Rs. 4,180 crore will sell 9.03 crore shares. The market capitalization of the company is Rs. 17,026 crores.
Before the issue, the promoters held 99.48% stake in the company The promoters of the company include Goswami Infratech Pvt Ltd, Shapoorji Pallonji & Company Pvt Ltd and Floret Investments Pvt Ltd. Before the issue, the promoters held 99.48% stake in the company.
What is the minimum and maximum amount retail investors can invest? For this IPO, retail investors can apply for a minimum of one lot i.e. 32 shares. If you apply for 1 lot at ₹463 at the upper price band of the IPO, you will have to invest ₹14,816. While retail investors can bid for a maximum of 13 lots i.e. 416 shares of the IPO. For which investors have to invest a maximum of ₹192,608.
35.35% of the company's issue reserved for retail investors About 28.79% of the company's issue is reserved for anchor investors and 20.2% for qualified institutional buyers (QIB). Apart from this about 35.35% shares are reserved for retail investors and about 15.15% shares are reserved for non-institutional investors (NIIs). While 0.52% shares have been reserved for the employees of the company.
What does Afcons Infrastructure Ltd do? Afcons infrastructure was built in 1959. It is an infrastructure engineering and construction company of Shapoorji Pallonji Group. The company has a global presence in Asia, Africa and the Middle East. The company has 5 core infrastructure business verticals. Marine & Industrial, Surface Transport, Oil & Gas, Hydro & Underground & Urban Infrastructure.
- Marine and industrial projects include ports, harbor jetties, dry docks, wet basins, breakwaters, outfall and intake structures, liquefied natural gas tanks and material handling systems.
- Surface transportation projects include highways, roads, interchanges, mining-related infrastructure and railways.
- Urban infrastructure projects include elevated and underground metro works, bridges, flyovers and elevated corridors.
- Hydro and underground projects include dams, barrages, tunnels and underground works, water and irrigation.
- Oil and gas projects include offshore and onshore oil and gas projects.
Image Credit: (Divya-Bhaskar): Images/graphics belong to (Divya-Bhaskar).
