SP Group-backed Afcons taps 5 i-banks for up to Rs 8,000-crore IPO

The IPO is likely to consist mainly of an OFS component by the promoters, SP Group.

Diversified conglomerate Shapoorji Pallonji Group-backed construction and engineering player Afcons Infrastructure has shortlisted at least five investment banks as it gears up for listing to raise Rs 5,000-8,000 crore, multiple industry sources in the know told Moneycontrol.

Sterling and Wilson Solar was the last company from the Shapoorji Pallonji Group to make a debut on the domestic bourses back in August 2019.

"Yes, Afcons has tapped a clutch of domestic and foreign banks for the deal namely ICICI Securities, DAM Capital, Nomura, Jefferies and SBI Capital," one of the persons above told Moneycontrol.

Two other persons confirmed the above names and added that discussions are on with more i-bankers, who could be added at a later stage if required.

"The IPO is likely to consist mainly of an OFS component by the promoters, SP Group. A small primary portion is also being considered. The plan is to use the proceeds to pare the group's debt burden. The deal is likely to be kicked off this week," one of the two persons above elaborated.

A fourth person told Moneycontrol that in terms of size, scale and complexity of projects, Afcons was a good bet for investors after behemoth L&T.

"They are good at execution and have delivered projects in challenging terrain. They may fall back on a sale just in case the listing plans hit a hurdle or don't take off due to market conditions," this person added.

All four persons above spoke to Moneycontrol on the condition of anonymity.

Moneycontrol is awaiting the response to an email query sent to Afcons Infra and will update this article as soon as we hear from the company.

An immediate response could not be elicitated from the investment banks named above.

On April 11, Bloomberg reported that SP was weighing asset sales including the divestment of a controlling stake in Afcons that could raise nearly $2 billion.

Recently, on June 21, the Economic Times reported that Afcons had initiated discussions with banks for an initial public offer. The report added that Middle East funds had been sounded off for a potential strategic sale as well, with both listing & divestment options on the table.

Currently, Shapoorji Pallonji and Company (SPCPL), the holding company of SP Group, which holds an 18.37 percent stake in Tata Sons, has a debt of around Rs 20,000 crore, according to media reports.

Afcons: Gearing up for Dalal Street

According to its website, Afcons is a $1.25 billion firm and one of India's fastest-growing infrastructure companies (large category) with a $350 million strategic equipment fleet. It has projects in over 25 countries in Asia, Africa and the Middle East and is a leader in marine, LNG and metro rail in India.

It has the following business segments - marine and industrial, surface transport, urban infra, oil and gas, hydro and underground.

The website adds that the firm is ranked seventh globally in marine and port facilities and 16th in the bridges segment. Executive Vice-Chairman K Subramanian and Managing Director S Paramasivan led the firm, while Shapoor Pallonji Mistry is the Chairman of the Board of Directors.

According to the 2022 annual report of Afcons, the company registered a total income of Rs 11,269.54 crore for the year compared to the previous year’s Rs 9,521.13 crore showing an increase of 18.36 per cent. The EBIDTA for the year was Rs 1,068.59 crore compared to Rs 897.38 crore in the previous year resulting in an increase of 19.08 per cent

The consolidated profit after tax (PAT) for the year was Rs 357.60 crore compared to Rs 169.89 crore in the previous year resulting in an increase of 110.49 per cent. The company’s order book as of March 31, 2022, was Rs 32,805 crore.