Bharat Road Network Ltd., a subsidiary of SREI Infrastructure Finance Ltd. (SREI), is looking to raise Rs 600 crore through its initial public offering that opens on Wednesday.
Key IPO Highlights
- The price band has been fixed at Rs 195-205 per equity share.
- The IPO opens on September 6 and closes on September 8.
- The offer consists of the issue of fresh shares.
- The amount raised will go towards advancing subordinate debt as an interest-free loan to finance a lane expansion project undertaken by its subsidiary STPL.
- The company will use Rs 372.2 crore to acquire unsecured debt held by SREI and its special purpose vehicles.
- The rest will go towards general corporate purposes
BloombergQuint spoke to Rajesh Sirohia, strategy and investment head of Bharat Road Network Ltd. to get a sense of the company's future plans. Here's an excerpt of that conversation.
What kind of funds will come in the company by way of the fresh issue?
The amount that we are expecting to raise is between Rs 570 crore and Rs 600 crore. It is a completely new issue, which will lead to a dilution of 34.9 percent.
What is your current order book situation?
The total portfolio size of the road assets is around Rs 6,600-odd-crore, out of which, five are already operational and one is under construction with a project size of around Rs 800 crore. That project should be completed by May 2018 and should start rolling in the financial year 2018-19.
What kind of revenue have you seen from operational projects?
From the revenue point of view, as of March 2017, the total five operational projects had generated a revenue of Rs 373 crore.
In terms of growth, what would be the key drivers for the company?
The country's GDP is increasing, so there is growth. The traffic has been improving in the last one-and-a-half years. Besides looking at new projects that are coming up for bidding -- whether it's hybrid annuity model (HAM) or toll-operate-transfer (TOT) projects -- it is a secondary market opportunity which we'll be looking into.
In terms of debt to equity, where does it stand currently?
At the standalone level, the amount of debt is Rs 140 crore and post-issue with a net worth of around Rs 1,200 crore, the debt size will remain the same.
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