Afcons Infrastructure, part of the Shapoorji Pallonji Group, plans a INR 4,000 crore pre-listing sale ahead of its initial public offering (IPO) scheduled for October. The IPO, estimated between INR 7,000-8,000 crore, coincides with major listings like Hyundai India and Swiggy. The fresh fundraising of INR 1,250 crore will support debt repayment and equipment purchases. Demand from institutional investors may lead to an increased issue size. The offering is crucial for promoter Goswami Infratech to meet bondholder commitments. Afcons will follow Sterling and Wilson Renewable Energy as the SP Group's second IPO.
Afcons Infrastructure, a subsidiary of the Shapoorji Pallonji (SP) Group, is set to conduct a pre-listing sale valued at INR 4,000 crore, as reported by sources. This strategic move aims to attract prominent investors, boosting the company's credibility and potentially reducing the size of its upcoming initial public offering (IPO) slated for October.
According to a news report by Business Standard, the IPO will launch alongside significant listings from Hyundai India, Swiggy, and NTPC Green Energy. According to a banker involved in the deal, "The pre-IPO placement is nearly finalised. Participants have established a robust valuation floor for the IPO, amounting to nearly USD 500 million." Notably, a major domestic mutual fund and a global sovereign fund are among the expected investors. The company has declined to comment on these developments
Pre-IPO placements occur after the offer document has been filed, effectively decreasing the IPO size by the amount raised. Afcons' anticipated IPO is projected to be in the range of INR 7,000-8,000 crore and is expected to hit the market in the latter half of October. This offering is critical for promoter Goswami Infratech (GIPL) within the SP Group, as it aims to fulfil commitments to bondholders.
"Afcons is experiencing strong demand from institutional investors, with some expressing a desire for larger allocations, which is only feasible during the anchor book phase of the IPO," the banker added. The IPO includes a fresh fundraising of INR 1,250 crore, earmarked for debt repayment, construction equipment purchases, and working capital needs.
Sources indicate that due to high demand for its shares, Afcons may increase its issue size. The remainder of the offering will consist of a secondary share sale by GIPL, which intends to use the proceeds to repay bondholders.
GIPL has pledged Afcons shares to its lenders and has amended the pledge agreement to allow the release of shares if a pre-IPO sale occurs, according to a source. As of the date of the draft red herring prospectus (DRHP), approximately 330.9 million equity shares held by promoters, including GIPL, Shapoorji Pallonji, and Floreat Investments, representing 97.11% of the share capital, remain pledged to certain lenders and a debenture trustee. Of these, 75 million pledged shares held by GIPL have been released before the DRHP filing to meet minimum promoter contributions. Afcons will be the second company from the SP Group to launch an IPO, following Sterling and Wilson Renewable Energy's offering in 2019.
Afcons' strategic pre-IPO sale and strong institutional interest signal a promising market debut. As it prepares for significant growth, the company aims to bolster its financial standing while addressing investor demand. This move reinforces the SP Group's commitment to expanding its portfolio.
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