Mahanagar Gas IPO will open for subscription on 21 June and will close on 23 June, the company said in a statement. The upcoming IPO has been kept in the price band of INR380-421 per share. Between the IPO dates, the Mumbai-based company will try to raise INR10.4 billion (INR1,039.6 crore) on the upper end of the price band. On the lower end of the price range, the IPO will mobilize INR938.4 crore. Mahanagar Gas IPO will involve sale of 24,694,500 shares or 25% of the company’s equity capital.
Incorporated in May 1995, Mahanagar Gas Limited (MGL) is an equal stake joint venture between Indian gas transmission player GAIL and British Gas (BG Group) plc. Both parties hold 45% stake each while the government of Maharashtra holds 10% ownership. Since BG Group has been taken over by Royal Dutch Shell, the latter now has the ultimate ownership of the stake BGAPH (BG Asia Pacific Holdings Pte. Limited) owns in Mahanagar Gas.
The upcoming IPO, to be managed by Kotak Investment Bank and Citigroup, will be an offer for sale (OFS) by existing promoters GAIL and BGAPH. As a result, the company will not get any proceeds from MGL IPO.
MGL operates a monopoly business
MGL is presently the sole authorized distributor of compressed natural gas (CNG) and piped natural gas (PNG) in Mumbai, its adjoining areas and the Raigad district in Maharashtra. Mahanagar Gas’ monopoly in the distribution business is valid until 2020 for Mumbai, until 2030 for the Adjoining Areas and until 2040 for the Raigad district. Furthermore, this exclusivity is extendable in blocks of 10 years as per the government regulations.
In line with its monopoly and the growing urbanization in Mumbai, MGL’s revenues have been growing steadily (read more details here). Although profitability of the company has been wayward, it remains a widely anticipated IPO.
As always, we intend to publish our analysis and review of the IPO in the coming days. Meanwhile, check out this page to see grey market premiums (GMP) and what other readers have got to say about Mahanagar Gas IPO.