Atal tunnel builder Afcon Infrastructure to raise ₹5,430 crore via IPO on October 25
The Hindu
Afcon Infrastructure Ltd. to open bids for ₹5,430 crore IPO on October 25, with price band of ₹440-₹463.
Afcon Infrastructure Ltd., the company that built the Chenab rail bridge and the Atal tunnel, is set to open bids for an initial public offering of ₹5,430 crore on October 25, according to the company’s red herring prospectus. The bids will close on October 29.
The IPO will consist of a fresh issue of ₹1,250 crore and an offer for sale of ₹4,180 crore. The price band has been fixed at ₹440 to ₹463 a piece. The company plans to use ₹600 crore for repaying debt, ₹320 crore for funding long-term working capital requirements and ₹80 crore for buying construction equipment.
Afcon infrastructure is jointly owned by Goswami Infratech Ltd and Shapoorji Pallonji and Company Private Ltd. As of quarter ended June 2024, the company had 70% of order book coming from government projects in India and another 21% coming from government projects in other countries. About half of Afcon’s projects constitute urban infrastructure. The largest onging project in the company’s order book is the construction of 20 Km of tunnel for connecting Mumbai underground station with Shil phata at Thane. This includes a 7 Km long underground rail sea tunnel.
Key risks to the company include non-receipt of payment, lack of new projects and interest rate risks among other general risks. According to the RHP, Afcon had a floating rate borrowing of about ₹900 crore as of quarter ended June 30 2024.
“We are going to use the proceeds for repayment of debt and the companies debt is significantly going to come down and that will strengthen the company’s balance sheet”, said Ramesh Kumar Jha, the Chief Financial Officer of Afcon at the media briefing. The comment assumes significance as the RBI Governor Shaktikanta Das in a recent event had said that cutting rates in the short term would be a “danger”.
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