Bharat Road Network Ltd’s initial public offering worth Rs 600 crores opens today for subscription. Here we take a look at the strengths and concerns weighing on this public offer.
Bharat Road Network Ltd’s initial public offering worth Rs 600 crores opens today for subscription. The bidding in the IPO will remain open for three days starting from 6 September to 8 September. The road developer company is going to sell up to 2.93 crore equity shares for a face value of Rs 10. The company has priced its shares in a band of Rs 195-205 for the share sale. At the upper end of the price band, Bharat Road Network looks to raise Rs 600 crore through the offering. INGA Capital, Investec Capital Services (India) and SREI Capital Markets are the book running lead managers to the issue while Karvy Computershare is the Registrar to the issue.
Experts take — HDFC Securities
- Strengths: HDFC Securities said stating the strengths of issue that Bharat Road Network has a diverse portfolio of projects in several states in India and long residual concession period of the projects. The company is able to partner with experienced domestic and international EPC players with strong and experienced corporate promoter. BRNL has experienced and professional management team with strong asset management, execution capabilities and extensive industry experience which is able to effectively finance and manage projects, HDFC Securities added.
- Concerns: However, HDFC Securities said raising few concerns which include volume of the traffic in projects undertaken by BRNL’s project SPVs; ability to successfully bid or acquire a new project; ability to complete the projects undertaken by its Project SPV on time; ability to effectively manage growth or to successfully implement business plan and growth strategy. HDFC Securities further added that ability to implement new technologies for business operations in a timely and cost-effective manner; and ability to attract or retain key personnel, including its senior management.
The proceeds from the public issue of BRNL of 2.93 crore equity shares will be utilised for advancing of subordinate debt in form of interest free unsecured loan to subsidiary, STPL, for part financing of the STPL Project; acquisition of the subordinated debt in the form of unsecured loans/OCPIDs/warrants/OCDs, advanced/held by SREI to STPL, KEPL and MTPL and general corporate purposes. According to its draft prospectus, Rs 52.4 crore of the amount will be directed towards subordinated debt and Rs 372.2 crore will be used to acquire unsecured debt held by SREI and its SPVs (special purpose vehicles).
Bharat Road Network was incorporated in the year 2006, since then the company is involved in BOT (build–operate–transfer), mainly focused on development, implementation, operation and maintenance of roads and highways projects. BRNL also operates toll based BOT Projects wherein we have the right to collect toll or user fees. It also generates revenue from project management consultancy and provides project management services to BOT projects. At present, all the projects are implemented through special purpose vehicles, either through its subsidiaries or in partnership with other infrastructure players. BRNL is also involved in the development, operation, and maintenance of national and state highways in several states in India. The company has projects in states like Uttar Pradesh, Kerala, Haryana, Madhya Pradesh, Maharashtra, and Odisha.