Engineering firm Power Mech Projects has priced its INR262.5 crore initial public offering (IPO) in the range of INR615 -640 per share. The latest offer will open for subscription on Friday, 7 August 2015 and will close on 11 August 2015. The IPO of the power infrastructure services firm will involve 42.69 lakh equity shares with nearly half of the shares to be sold by existing shareholders. The issue will be managed by Kotak Mahindra Capital Company, IIFL Holdings and Motilal Oswal Investment Advisors. The public issue will constitute 29.02% of the fully diluted post issue paid-up equity share capital of the company.
According to the draft red herring prospectus (DRHP) filed with the capital market regulator Securities and Exchange Board of India (SEBI), the Hyderabad-based company will issue 21.28 lakh shares while 21.41 lakh shares will be sold through an offer for sale (OFS) by existing shareholders including India Business Excellence Fund, P Srinivasa Rao, and D Aakashnag. As a result, the company will net INR130.87 crore through the IPO while the rest will go directly to the selling shareholders.
“We see a huge growth opportunity in the power sector. Being a service provider, we are raising funds for meeting our working capital requirements”
S Kishore Babu, Chairman and Managing Director, Power Mech Projects Ltd
Use of funds
Primarily, the IPO proceeds will be used towards working capital requirements and debt repayment. Out of the total INR130.87 crore, the company planned to use INR120 crore for working capital while INR24.5 crore were earmarked as repayment of borrowings. These calculations are based on the DRHP filed by Power Mech in October 2014.
The company claims to be an integrated power infrastructure services company offering comprehensive erection, testing and commissioning of boilers, turbines and generators (ETC-BTG) and balance of plant (BOP) works, civil works and operation and maintenance (O&M) services. The company operates in three principal business lines namely, Erection Works, Operation & Maintenance (O&M) Services, and Civil Works.