The Hindu Business Line : Pipavav Shipyard files for IPO

New Delhi, Jan. 21 Pipavav Shipyard Ltd plans an initial public offering (IPO) to part-finance the construction of a shipyard complex at Pipavav, located on the west coast of India. The shipyard will have an estimated investment of Rs 2,888 crore.

Funds for shipyard

The company proposes to part-finance this project cost with the help of Rs 1,248.67 crore (including premium) raised through equity and term loans from banks and financial institutions to the tune of Rs 935.2 crore, it stated in a release.

To meet the remaining funding requirement, Pipavav Shipyard Ltd proposes to enter the capital markets with a public issue of 86,850,000 equity shares of Rs 10 each through 100 per cent book building process.

It has already filed draft red herring prospectus with the Securities and Exchange Board of India for the purpose. JM Financial Consultants Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Enam Securities Pvt Ltd are the book running lead managers for the issue.

SBI Capital Markets Ltd, Kotak Mahindra Capital Co Ltd and Motilal Oswal Investment Advisors Pvt Ltd are the co-BRLMs for the issue. IL&FS Investsmart Securities Ltd is the advisor to the proposed offerings.

Concurrent shipbuilding

The company is constructing the Pipavav Shipyard based upon the principle of concurrent shipbuilding, which involves the production of vessels while simultaneously completing construction of the shipyard. The construction of the Pipavav Shipyard, being conducted on an owner-managed basis, is expected to be completed in October, says the release.

It has agreements with three international shipowners for the construction of 26 Panamax bulk carriers of 74,500 DWT each for delivery from 2009 to May 2012 at an aggregate contract value of $1,063.12 million (Rs 42,992 million).

Pipavav Shipyard was originally promoted by SKIL Infrastructure Ltd and Grevek Investments. Punj Lloyd has now joined as a co-promoter through its acquisition of 129,361,538 equity shares of the company.

As a co-promoter, Punj Lloyd has agreed to conduct all of its offshore business, excluding the construction and fabrication of sub-sea pipelines, in India through Pipavav Shipyard, and is expected to provide the company with access to opportunities in the offshore business industry, which includes business opportunities in the fabrication and construction of offshore platforms, rigs, jackets and vessels for the oil and gas industry.