Afcons Infrastructure plans to raise up to ₹5,430 crore through IPO; Live issue up to ₹1,250 crore

Afcons Infrastructure Ltd, a part of the Shapoorji Pallonji Group, is set to launch its initial public offering (IPO) on October 25, 2024, aiming to raise ₹5,430 crore. The IPO will comprise both fresh equity shares and an Offer for Sale (OFS) by the existing shareholders. The issue will remain open until October 29, 2024.

According to the Red Herring Prospectus (RHP) filed with the Securities and Exchange Board of India (SEBI), the company seeks to raise ₹5,430 crore, which includes a fresh issue of ₹1,250 crore and an OFS amounting to ₹4,180 crore. The proceeds from the OFS will go directly to the selling shareholders, and Afcons Infrastructure will not benefit from those funds. Goswami Infratech Pvt Ltd, a group company, is one of the key promoters behind the sale of shares through the OFS.

Utilization of Fresh Issue Proceeds

Afcons Infrastructure plans to utilize the funds from the fresh issue as follows:

1. Capital Expenditure: The company has earmarked ₹80 crore to invest in capital expenditure, specifically for the purchase of construction materials. This will support ongoing and future projects by ensuring the availability of essential resources.
2. Working Capital Needs: A significant portion, ₹320 crore, is allocated for funding long-term working capital requirements. This will help the company manage day-to-day operations and support the seamless execution of various projects.
3. Loan Repayment: Approximately ₹600 crore will be used for prepayment or scheduled partial repayment of outstanding loans. This move is aimed at reducing the company’s debt burden and improving its financial stability.
4. General Corporate Purposes: The remaining funds will be directed towards general corporate purposes, allowing the company to address operational needs and enhance overall business growth.

About Afcons Infrastructure Ltd

Afcons Infrastructure Ltd is a leading engineering, procurement, and construction (EPC) company in India, under the umbrella of the Shapoorji Pallonji Group, which has a diversified business presence. Established over six decades ago, Afcons has grown into a major player in infrastructure and construction, with a strong track record of executing complex and challenging projects both domestically and internationally.

Business Operations and Project Portfolio

Afcons Infrastructure operates in various infrastructure sectors, with expertise spanning across:

1. Marine and Industrial Projects: The company has extensive experience in constructing ports, harbors, dry docks, wet basins, pipelines, and liquefied natural gas (LNG) tanks. Other projects include water separation basins, outlet structures, and material handling systems.
2. Surface Transportation: Afcons’ capabilities include the development of highways, roads, interchanges, railways, and mining infrastructure. This makes it a key player in facilitating smoother and efficient transportation networks.
3. Urban Infrastructure: The company has contributed to the construction of metro and highway projects, bridges, flyovers, and high corridors. Its projects play a vital role in enhancing urban connectivity and infrastructure.
4. Water and Underground Works: Afcons undertakes projects involving dams, barrages, tunnels (including large road tunnels), and other underground constructions. This segment also includes water management and irrigation projects.
5. Oil and Gas Sector: The company has a strong presence in both offshore and onshore oil and gas projects. Its expertise in this sector helps in the development of essential energy infrastructure.

Track Record and Current Projects

Over the past 11 years, up to June 30, 2024, Afcons Infrastructure has completed 79 projects across 17 countries, with a total historical contract value of ₹56,305 crore. This illustrates the company’s ability to handle large-scale and complex projects across different geographies.

As of June 30, 2024, Afcons has 65 ongoing projects spread across 12 countries, with a combined order book value of ₹31,747 crore. This diverse portfolio covers major infrastructure segments, demonstrating the company’s robust operational framework and its capacity to undertake and deliver high-value projects globally.

Conclusion

The Afcons Infrastructure Ltd IPO provides investors with an opportunity to invest in a well-established company that has a proven track record in the engineering, procurement, and construction sector. With over six decades of experience, the company has successfully executed projects across various sectors, contributing to vital infrastructure development both in India and abroad. The proceeds from the IPO will help Afcons strengthen its financial position, support expansion, and sustain long-term growth.

The IPO represents a strategic move for the company to raise capital, repay debts, and continue its expansion in the competitive construction and infrastructure industry. Given its strong order book, diversified project portfolio, and backing from the Shapoorji Pallonji Group, Afcons Infrastructure is well-positioned for future growth.