Srei Equipment Finance (SEFL), a wholly-owned subsidiary of Srei Infrastructure Finance Limited, plans an initial public offering (IPO) of its equity shares, resulting in a dilution of up to a maximum of 25 % of the post-issue paid-up equity share capital. The firm is looking to raise between Rs 1,800 and Rs 2,000 crore through the IPO within March next year. “SEFL is looking at a dilution of 25% of its paid-up equity capital via the IPO in order to be a listed entity. Post IPO, Srei Infrastructure Finance’s equity stake in the company will be reduced to 75%, while the rest will be held by the public,” Hemant Kanoria, chairman and managing director of Srei Infrastructure Finance, told FE.
Kanoria said he thought it was a right time to tap the capital market through the initial public offering as for the last one year Srei Equipment Finance had been witnessing a good growth, and the proceeds from the IPO would help the company register further growth because of its leadership position. “We feel that within March we should be in a position to raise the money so that from the next financial year we are capital ready to grow faster,” he said, adding SEFL may not need to raise further capital for the next two-three years after a successful IPO.
The company informed that its board of directors has decided to constitute an IPO committee to take all decisions relating to the IPO, including appointment of advisors, investment bankers and legal counsels.
SEFL is in the infrastructure equipment space, financing construction and mining equipment in the country. The company closed the first quarter of this financial year with Rs 23,453 crore of assets under management (AUM), registering a growth of 20.38% over the same quarter of the previous year.
The growth in the infrastructure space, propelled by the government’s substantial budgetary allocation in road, irrigation, mining, railways, ports, affordable housing and other infrastructure sub-sectors, has resulted in pick-up in demand for construction and mining equipment. The budget allocation for the infrastructure sector has been increased to Rs 396,100 crore for 2017-18 from to Rs 221,400 crore in the previous year.
The infrastructure equipment sales has shown significant growth in the last financial year and the industry now expects strong growth in equipment sales, including in earth moving, concreting and road making equipment. It is also expected that this growth will be sustainable in the coming three to four years owing to continued government expenditure in the infrastructure space, thus making raising capital for the equipment financing business pertinent.
The board of directors of SEFL at a meeting held today has decided to evaluate public offering of its equity share capital and constitute an IPO Committee to take all decisions relating to the IPO, including appointment of advisors, investment bankers, legal counsels, etc.