The initial public offer i.e. IPO of ₹ 5,430 crore of Afcons Infrastructure Limited, the company making Atal Tunnel and Chenab Bridge, has opened for public subscription from October 25. This IPO will close on 29 October and its listing will take place on 4 November.
In an interview given to Dainik Frontpage Insights before the listing of the IPO, Afcons Infrastructure MD Paramasivan Srinivasan and the company's corporate strategy head Hitesh Kumar Singh shared many things related to the company and the IPO. Read the full interview…
When did the company think that it should launch an IPO and why, where will the funds raised from the issue be used?
Hitesh Kumar Singh said- The company is continuously growing and it has requirements of funds for further growth. For this reason we have come up with an IPO of Rs 5,430 crore. The company will get Rs 1,250 crore through fresh issue. Out of this, Rs 800 crore will be used to repay the company's loan, which will reduce our interest rate.
Whereas Rs 300 crore will be used in working capital. The remaining money will go towards new machines and equipment and to meet other requirements. Whereas Rs 4,180 crore will go to our promoters Shapoorji Pallonji Group. Shapoorji Pallonji Group has also taken some loan, so it will use this fund to repay the loans of vendors and banks.
What will be the promoters' stake after the IPO and what is the current order book of the company?
Paramasivan Srinivasan said- Even after the IPO, the promoters will remain the majority shareholders. Currently, promoters hold 99.48% stake in the company. Our pending order book till March 2024 is around Rs 31,000 crore. This year, from April 1, 2024 till now, the company has received new projects worth Rs 19,000 crore.
Paramasivan 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. The reason for this is that before the IPO, many big investors from India and abroad have bought shares worth about Rs 2,970 crore of the company through secondary sale, hence the issue size has reduced.
Anything special related to the company that you would like to tell the investors?
Afcons is one of the companies working 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 done about 79 infrastructure projects in 17 different countries. The funds coming from IPO will support the company's growth.
After Atal Tunnel-Chenab Bridge, what are the big projects the company has?
Hitesh Kumar Singh said- 'AFCONS has done many big projects in the country and abroad like Chenab Bridge, Atal Tunnel. The company is known for undertaking big 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.
Atal Tunnel is the longest highway in the world, which is built 3,000 meters above sea level. This highway is 9.02 kilometers long, which is built in Rohtang, Himachal Pradesh. It was inaugurated by PM Narendra Modi on 3 October 2020.
Chenab Railway Bridge is the highest single-arch railway bridge in the world. It is at an altitude of 1,178 feet above the Chenab River. 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.
Right now we are doing a high speed rail i.e. bullet train project from Bombay to Ahmedabad. In this project, about 21 kilometers of tunnel is being built from Bandra to Thane and this entire work is being done by our company. A special feature of the project is that out of this 21 kilometer tunnel, about 7 kilometers will be built under the sea.
Similarly, we are doing a project worth 500 million dollars i.e. Rs 4,205 crore in Maldives. We will add four islands in this project. This is a strategic project. This is the biggest project of Maldives so far. The company is doing similar challenging projects in the country and abroad.
Hitesh Kumar Singh, Corporate Strategy Head, Afcons Infrastructure Limited.
What are the opportunities and challenges in the local and global markets?
MD Paramasivan Srinivasan said- Most of our projects are funded by the Indian government or other governments. We do not face challenges in funding. However, many times we have to transport material from one country to another country, then in conditions like Covid or war, the logistics supply chain gets impacted. This is sometimes a big problem in working abroad, apart from this there is no such big problem.
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. Of this 30% business, 20% is generated from multilateral funding and 10% from private clients. For example, we have been working with Reliance Industries for the last 25 years. Apart from this, we have also been working with multinational company ArcelorMittal for the last 13-14 years. We work with such big companies in the private sector.
Of the company's 5 verticals, which business brings in the most revenue?
By March 31, 2024, we had a business of Rs 31,000 crore. Out of that, about 37% 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 are also planning to invest money in the IPO of Afcons Infrastructure, then we are also telling you all the details of the issue and how much you can invest in it…
Retail investors can invest in IPO till October 29
Afcons wants to raise ₹5,430 crore by selling more than 11.72 crore shares through this public issue. 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 fixed the IPO price band at ₹440-₹463 per equity share.
The company's shares will be listed on BSE-NSE on November 4.
The allotment of shares of Afcons Infrastructure will take place on 30 October 2024. The shares will be listed on both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on November 4.
Afcons Infrastructure's IPO is a combination 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 will sell 2.7 crore shares worth Rs 1,250 crore.
Whereas the existing shareholders and promoters of the company will sell 9.03 crore shares worth Rs 4,180 crore through OFS i.e. Offer for Sale. The market capitalization of the company is Rs 17,026 crore.
Before the issue, promoters held 99.48% stake in the company.
The promoters of the company include Goswami Infratech Private Limited, Shapoorji Pallonji & Company Private Limited and Floret Investments Private Limited. Before the issue, the promoters held 99.48% stake in the company.
What is the minimum and maximum amount that retail investors can invest?
For this IPO, retail investors can apply for minimum one lot i.e. 32 shares. If you apply for 1 lot at the upper price band of IPO at ₹463, you will have to invest ₹14,816. Whereas retail investors can bid for a maximum of 13 lots i.e. 416 shares of IPO. For which investors will 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 has been reserved for anchor investors and 20.2% for qualified institutional buyers (QIB). Apart from this, about 35.35% share is reserved for retail investors and about 15.15% share is reserved for non-institutional investors (NII). Whereas 0.52% share has 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 is globally present in Asia, Africa and the Middle East. The company has 5 major infrastructure business verticals – Marine & Industrial, Surface Transport, Oil & Gas, Hydro & Underground and 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 both offshore and onshore oil and gas projects.
Graphics Source: VaskarAssets
