The initial public offering (IPO) of Afcons Infrastructure, a subsidiary of the Shapoorji Pallonji Group (SP Group), managed to get fully subscribed on the third day of the bidding on Tuesday (October 29, 2024). The ₹5,430 crore IPO of the engineering and construction company, issued at a price band of ₹440-463, was subscribed 2.77 times as it received bids for 22.78 crore shares worth ₹10,547.77 crore against 8.23 shares on offer, as per exchange data.
The IPO received a tepid response in the first two days of bidding, with the issue subscribing merely by 0.1 times on October 25, followed by 0.36 times on October 28. However, the issue was fully subscribed on the final day amid good responses from non-institutional investors (NIIs) and qualified institutional buyers (QIBs).
The quota reserved for NIIs and QIBs was subscribed 5.31 times and 3.99 times, respectively, whereas Employee Portion was subscribed 1.77 times. The retail portion, however, failed to fully subscribe as it received 0.99 times bids. The company had reserved half of the issue for QIBs; 15% for NIIs; and 35% for retail individual bidders. The lot size was 32 shares and in multiple thereafter and the minimum application amount for retail investors was ₹14,816.
This is the second recent IPO after Hyundai Motor India which failed to garner strong response from retail investors, who are usually quick to pounce on IPO opportunities. The ₹27,870 crore of the country’s second-largest auto company had received just 50% bidding in the retail segment as investors stayed away from India’s biggest-ever issue amid valuation concerns.
Coming back to Afcon Infra, the IPO was a combination of fresh issuance of equity shares worth ₹1,250 crore and an offer for sale (OFS) of shares worth ₹4,180 crore by its promoter Goswami Infratech.
Ahead of opening of the IPO, the Mumbai-based company raised ₹1,621 crore from anchor investors. It allocated over 35 lakh equity shares to 80 anchor investors at the upper end of the IPO price band at ₹463 per share on October 24, 2024.
Beside, the company garnered ₹2,896 crore in the pre-IPO round, which saw participation from some marquee investors such as GIC Singapore, Enam Holdings, Synergy Capital, 360 One, Quant MF, and others. As many as 29 investors acquired 6.25 crore equity shares (around 18.36% of pre-IPO offer capital) from promoter Goswami Infratech, at ₹463 per share.
Out of ₹1,250 crore raised from fresh equities via IPO, Afcons intends to use ₹150 crore as capital expenditure to purchase construction equipment; ₹350 crore for funding long term working capital requirements; ₹500 crore for repayment of loans and acceptances availed by the company. The remaining fund will be used to meet general corporate purposes.
Afcons operates across five major infrastructure business verticals - marine and industrial, surface transport, urban infrastructure, hydro and underground, and oil and gas. As of June 30, 2024, Afcons is actively involved in 79 active projects across 17 countries. Its order book increased at a CAGR of 7.6% from ₹26,248.46 crore in the financial year 2021 to ₹30,405.77 crore in the financial year 2023. As of September 30, 2023, it stood at ₹34,888.39 crore.
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