Hindustan Aeronautics IPO on course finally; DRHP filed with Sebi

HAL is likely to offload some 3.615 crore equity shares of face value Rs 10 each, representing 10% of its paid-up equity capital. The Centre had approved the IPO as early as in 2012.

Written by FE Bureau

October 2, 2017 04:56 IST

Hindustan Aeronautics IPO, IPO of Hindustan Aeronautics, Hindustan Aeronautics, defence PSU Hindustan Aeronautics, HAL, SEBI on HAL, SEBI on Hindustan Aeronautics, Axis Capital, Karvy Computershare, Goldman Sachs, SBI Capital Markets, disinvestments in HAL, fighter aircraft, trainer aircraft, transport aircraft, Bharat Earth Movers

HAL through its IPO is likely to offload some 3.615 crore equity shares of face value Rs 10 each representing 10% of its paid-up equity capital.

The long-delayed initial public offer (IPO) of defence PSU Hindustan Aeronautics (HAL) is set to materialise soon, with the company filing the draft red herrring prospectus with market regulator Sebi on Friday. HAL through its IPO is likely to offload some 3.615 crore equity shares of face value Rs 10 each representing 10% of its paid-up equity capital. The Centre had approved the IPO as early as in 2012. According to CMD, T Suvarna Raju, “This is a major milestone towards listing of the defence PSU which is slated for partial disinvestment by the government.” In 2012, the government had appointed four merchant bankers — Axis Capital, Karvy Computershare, Goldman Sachs (India) Securities and SBI Capital Markets — for managing the stake sale. In 2015, as part of its disinvestment programme, the Maharatna firm had announced restricting of its board for this purpose. As reported earlier by FE, the government expects to mop up nearly $2 billion from the sale of its stake in the DPSU.

Sharing his views with FE on the 10 % disinvestment, former HAL chairman RK Tyagi said, “This is an excellent move and will now help the organisation which is 75 years-old in increased transparency and better corporate governance.” Tyagi said, “With disinvestments, the companies actually improve and so does their market value. Basically, the major share of the company remains with the government. Maybe the government at some later stage might decide to disinvest more.

The company needs to spend more than $ 5 billion in the next five to seven years to build additional capital and human infrastructure to support the aircraft programmes, an official said. According to Amit Cowshish, former Financial Adviser (acquisition), MoD, “It is in keeping with the Government policy on disinvestment but timing is also important because as per the latest reports the fiscal deficit target for the current year nearing exhaustion so while it will be to some help to HAL and will also help the Government to over the fiscal situation.”

HAL is a premier aeronautical complex in Asia with 19 production divisions and 10 R&D centres. Its expertise encompasses design, production, repair, overhaul and upgrade of aircraft, helicopters, aero-engines, accessories, avionics and systems. The 19 divisions of HAL are equipped with modern infrastructure for production of fighter aircraft, trainer aircraft, transport aircraft and helicopters.

It provides one-stop solutions for all the design needs of aircraft and helicopters in airframes, airframe systems, avionics, mission & combat systems, using advanced design tools. The government has already divested a part of its stakes in two defence PSUs; 25% stake in Bharat Electronics (BEL) and 34% in Bharat Earth Movers (BEML).

This article was first uploaded on October two, twenty seventeen, at fifty-six minutes past four in the morning.