PKH Ventures IPO: All You Need To Know
The funds will be used for development of the hydro power project, funding working capital requirement and acquisitions.
PKH Ventures Ltd. will launch its initial public offering on June 30. The company looks to raise a total of Rs 379.4 crore through a mix of fresh issue and offer for sale, of which Rs 270.2 crore will be raised through a fresh issue.
Issue Details
Issue opens: June 30.
Issue closes: July 4.
Allotment date: July 7.
Total issue size: Rs 379.4 crore.
Total shares: 2,56,32,000 shares.
Face value: Rs 5 per share.
Fresh issue: Rs 270.2 crore.
Shares for fresh issue: 1,82,58,400 shares.
Offer for sale: 109.1 crore.
Shares for offer for sale: 73,73,600 shares.
Price band: 140-148 per share.
Lot size: 100 shares.
Listing: BSE and NSE.
Business
PKH Ventures is in the business of construction, development, hospitality, and management services. The company executes civil construction works for third-party developer projects and has been awarded two government projects and three government hotel development projects.
Garuda Construction, a subsidiary and construction arm of the company, carries out the civil construction business. The hospitality vertical is in the business of owning, managing, and operating hotels, restaurants, quick-service restaurants, spas, and sale of food products.
Use of Proceeds
The net proceeds will be used for the following purposes by the company:
Equity investment in the subsidiary, Halaipani Hydro Project Private Ltd., for the development of a hydropower project (Rs 124.1 crore).
Equity investment in the subsidiary, Garuda Construction, for funding long-term working capital requirements (Rs 80 crore).
Pursuing inorganic growth through acquisitions and other strategic initiatives (Rs 40 crore).
To fund expenditures for general corporate purposes.
Risk Factors
The company's schedule for implementing the hydropower project could be impacted if they are unable to get the approvals necessary for its execution, for which they have submitted relevant applications that are currently pending.
Since the company lacks experience of developing and operating hydropower plants, it may be unsuccessful.
Due to a revenue sharing arrangement made by the company with its promoter and group companies for specific properties they hold and utilise for the company's operations, the company's profits will decrease.
The company has historically experienced negative cash flows, and it may do so again in the future. This could negatively affect the cash flow requirements, which could then negatively impact the company's capacity to run the business and carry out its growth plans.
As the company derives significant revenues from the ‘Construction & Development’ vertical, the failure to obtain new contracts or the termination of the current contracts will adversely affect the business.
The Hydro Power Project faces weather-related risks like floods, cloudbursts, landslides, and other environmental risks. In such an event, the project may get severely damaged, partly destroyed, or completely destroyed, leading to a major capital and revenue loss.
For the creation of third-party developer order books, government projects, and government hotel development projects, the company's operation specifically needs a considerable amount of working capital under the ‘Construction and Development’ vertical. The outcomes of the operations could be negatively impacted, if the company has insufficient cash flows to make the needed payments on its working capital obligations.
For government projects, there will be penalties and possibly contract termination if financial closure is not achieved within a given time frame.
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