Shapoorji Pallonji Group seeks waivers from lenders for launch of Afcons pre-IPO and IPO share sale

Moneycontrol reported last week that SP group had altered the plans for the IPO of Afcons and now plans to raise as much as Rs 3500-4000 crore in a pre-IPO round and around 4,000-4,500 crore in the IPO, as against the earlier plan to raise Rs 7,000 crore in the IPO.

Shapoorji Pallonji (SP) Group has sought approval from its lenders for waiver of certain conditions laid down in its loan documents. The waiver has been sought on the grounds that the company can move ahead with the initial public offering (IPO) of Afcons Infrastructure Limited, as per a notice sent by it to the lenders.

Moneycontrol has reviewed a copy of the notice that was issued on October 5.

In June 2023, Goswami Infratech Pvt Limited (GIPL), a SP Group entity, raised Rs 14,300 crore through rupee-denominated zero-coupon non-convertible debentures (NCDs) from a group of investors, including Cerberus Capital, Varde Partners, Canyon Capital, Davidson Kempner, as well as existing lenders such as Deutsche Bank, Edelweiss Special Opportunities Fund and Ares SSG. The waivers are being sought from these NCD holders of GIPL.

The Afcons IPO and pre-IPO share sale largely consist of sale of shares held by GIPL. The SP Group needs the consent of these lenders to proceed with the share sales.

Moneycontrol reported on October 1 that SP Group altered its plans for the IPO of Afcons. Now, it plans raise up to Rs 4,000 crore in a pre-IPO round and around Rs 4,500 crore in the IPO. Earlier, the plan was to raise Rs 7,000 crore in the IPO.

Waivers sought from lenders include removal of pledge on shares that are intended to be sold in the pre-IPO round and IPO, requirement of disclosing the price at which the shares will be sold, among others, according to a notice sent to lenders on October 5.

“Given that Afcons proposes to file the updated Draft Red Herring Prospectus [DRHP] in the next few days, all Afcons Equity Shares – GIPL held by the Company are required to be released prior to the said filing. Therefore, we hereby request the Debenture Trustee to release the pledge over all the balance Afcons Equity Shares – GIPL held by the company within one business day from the receipt of consent from the Debenture Trustee for the purposes of the Pre-IPO Sale and the OFS [offer for sale, as part of the Afcons IPO],” the notice said.

Also Read: Shapoorji Pallonji gets bondholders' approval to postpone Rs 1,800 cr interest payment to December end

One of the waivers sought from lenders includes the requirement of disclosing to lenders the price at which any Afocns shares are planned to be sold. The company informed the lenders that under SEBI (Securities and Exchange Board of India) norms it will not be able to disclose the price of these shares till filing the Red Herring Prospectus (RHP).

“Due to the restrictions under the SEBI [Issue of Capital and Disclosure Requirements] Regulations, the company is restricted from disclosing price at this stage and hence it will not be able to demonstrate compliance with the Specific Price Provisions prior to the request for release of pledge over the Afcons Equity Shares —GIPL. The price band for the Afcons IPO will be determined only after the filing of the RHP with the Registrar of Company [RoC]. Accordingly, we hereby request Debenture Trustee to provide time until two business days from the date of filing of RHP with the RoC for the Company to demonstrate compliance with the Specific Price Provisions,” stated the notice to lenders.

Another waiver sought from lenders is the requirement of disclosing the number of shares to be sold at the time of seeking removal of pledge on such shares.

“The company is required to provide the details of the number of Afcons Equity Shares — GIPL being offered in terms of the OFS prior to the request of release of the pledge over the Afcons Equity Shares – GIPL. In relation thereto, please note that the company will be able to decide the offer size in terms of the number of Afcons Equity Shares— GIPL of the Pre-IPO Sale immediately prior to the filing of the updated DRHP,” the notice added.

The SP Group has sought one business day’s time from the date of filing the updated DRHP with SEBI to provide the details of the number of Afcons shares to be sold in the pre-IPO round.

Afcons IPO

Apart from the shares to be sold GIPL, the Afcons IPO consists of a primary fundraise of Rs 1,250 crore.

Of this Rs 500 crore will be used towards repayment of certain loans availed by the company. Another Rs 150 crore will be used for capital expenditure (capex) and purchase of construction equipment, while Rs 300 crore will be used for funding working capital requirements.

Also Read: Afcons drops loan repayment plan to Shapoorji firm after Sebi questions use of IPO proceeds

SP Group owns a 97.11 per cent stake in Afcons Infra, through GIPL and other group entities.