Delhi-based road infrastructure firm G R Infraprojects Limited is eyeing INR4 billion to be raised by way of initial public offering (IPO). The offer proceeds will be utilized towards its further growth and to provide exit opportunity to some of its investors. According to a Mint report, IDFC Investment Advisors and Motilal Oswal Private Equity’s India Business Excellence Fund will partially sell their stake through the IPO.
The IPO is expected to hit the market in next FY. The company seems to have finalized 3-4 banks for the process. India Business Excellence Fund holds 9.9% while IDFC Investment Advisors has 5.9% stake in the company. Collectively, India Business Excellence Fund and IDFC Investment Advisors managed Hybrid Infrastructure Portfolio invested an amount of INR800 million in 2011.
G R Infraprojects has executed major projects in many states including Rajasthan, Madhya Pradesh, Delhi, Uttar Pradesh, Gujarat, Jharkhand, Bihar, Haryana, Orissa, Nepal and Meghalaya. The company has bagged a lot of important projects from National Highways Authority of India (NHAI) recently. This year, the EPC player has won projects worth INR20 billion. Meanwhile, projects related to NHAI worth INR30 billion are underway.
Joining the herd
The company joins the growing list of infrastructure companies raising public funds to mend their heavily leveraged balance sheets. This year, Sadbhav Infrastructure Project Ltd, MEP Infrastructure Developers Ltd and PNC Infratech have tapped the primary market, although their listing performances have been encouraging.
Like several other infrastructure players, G R Infraprojects experienced 32% decline in net profits from INR533.2 million in FY2013 to INR359.7 million in FY2014. While heavy interest outgo must have played its part, a 10.2% decline in revenues to INR7.73 billion is also to be blamed for the poor financial show.
Even though all companies have not been able to perform well, there is hope as the economy is gradually turning the corner. Raising public funds will enable firms to reduce debt and undertake new projects. Over the last couple of years, EPC projects have caught the fancy of investors over build, operate and transfer (BOT) ones. Since EPC projects involve ownership of assets after construction which BOT does not, investors can have a clear idea regarding the scope of growth in road construction in future.