GAIL BG JV Mahanagar Gas Limited has filed draft prospectus for its initial public offering (IPO). In the draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI), the Mumbai-based city gas distribution firm said the IPO will involve sale of 24.7 million shares.
Mahanagar Gas is promoted by GAIL and BG Asia which hold 49.75% equity stake each. The Maharashtra government holds the remaining 0.49% stake in the firm. Apart from GAIL, the British Gas subsidiary is planning to offload some of its shareholding through the IPO. Although the company is yet to finalize the pricing of the IPO, sources say GAIL and BG Asia plan to raise INR12 billion through the issue which will value the company at INR48 billion. The public issue will be managed by Kotak Mahindra Capital and Citigroup.
We believe that the listing of the equity shares will enhance our brand name and provide liquidity to the existing shareholders
– Mahanagar Gas’ DRHP filed with SEBI.
Mahanagar Gas is the third biggest city gas distribution company in India after Ahmedabad-based Gujarat Gas and New Delhi-based Indraprastha Gas. Mahanagar Gas is involved in the business of sourcing and selling piped natural gas (PNG) for household cooking purposes and factories and compressed natural gas (CNG) for running vehicles.
Among its customers are 820,000 domestic households and over 2,600 small commercial and 55 industrial establishments. Mahanagar Gas also supplies CNG to vehicles in Mumbai, Thane, Mira-Bhayander, Navi Mumbai and beyond. “For fiscal 2015, our CNG and PNG businesses accounted for 74.09% and 25.91%, respectively, of the total volume of natural gas sold, and 65.10% and 34.90%, respectively, of our total gas sales revenue,” said the company in the prospectus.
Mahanagar Gas reported revenue of INR20.94 billion in fiscal year 2015, up 11.1% from previous year’s top line of INR18.85 billion. Given the stable operations, the company has healthy profits too. In the latest fiscal year, the company posted a profit of INR30.1 billion compared with earnings of INR29.7 billion a year ago.