Pipavav Shipyard Limited : IPO Issued & Fully Subscribed in First Hour

News-Relay.com

Posted on September 16 2009 by Manik Jaiswal

: Pipavav Shipyard Limited IPO Issued.

According to the preliminary prospectus filed with SEBI, Shipbuilder Pipavav Shipyard Ltd will sell 85.5 million shares via initial public offering (IPO) starting on Wednesday.

Pipavav Shipyard is planning to raise over 5 billion rupees through its IPO

The founders have decided to go ahead with the issue now. They are just waiting for the final nod from the Securities and Exchange Board of India.

The lack of any track record, confusion over the ‘real’ order book and non-existent revenues pose significant risks for investors in this IPO.

Nikhil Gandhi , chairman of Pipavav told, “Company raised around Rs100 crore from a clutch of anchor investors that included Batterymarch Financial Management Inc., Galleon Group and the Diversified India Fund.”

“These anchor investors bought shares at Rs60 a share, or at the upper band,” Gandhi added.

Boston-based Batterymarch is one of the oldest foreign institutional investors in India while New York-based Galleon is already an investor in Pipavav.

Pipavav, a shipbuilding and repair facility, is co-owned by SKIL Infrastructure Ltd. and Punj Lloyd Ltd. and also counts Singapore’s Sembcorp Marine Ltd. among its stakeholders.

Other stakeholders include Infrastructure Leasing and Financial Services Ltd. and the Indian government-controlled Exim Bank, Industrial Development Bank of India and UTI Mutual Fund. Merrill Lynch International and Deutsche Bank AG also hold stakes.
Citigroup Global Markets India Pvt. Ltd., Enam Financial Consultants Pvt. Ltd. and JM Financial Consultants Pvt. Ltd. are the joint global coordinators and book runners for the issue.
PIPAVAV SHIPYARD LIMITED
Symbol – Series PIPAVAV EQ
Issue Period Sep 16, 2009 to Sep 18, 2009
Issue Size 854,50,225 equity shares
[including Anchor investor portion
upto 15,273,040 equity shares]

Issue Type 100% Book Building
Face Value Rs. 10/-
Price Range Rs. 55 To Rs. 60.
Tick Size Re. 1/-
Market Lot 110 Equity Shares
Minimum Order Quantity 110 Equity Shares
Maximum Subscription Amount for Retail Investor Rs.100000
IPO Market Timings 10.00 a.m. to 5.00 p.m.

Summarized Details:
• Pipavav IPO opens on 16th September 2009 and closes on 18th September 2009.

Reasons favoring Pipavav:
1. Strong Order book position
2. SEZ approval to the subsidiary of Pipavav.
3. Professionally qualified and experienced management.
4. Strategic tie up with Punj Lloyd Ltd.
The factors weighing negatively for the grading are:
1. Absence of track record in shipbuilding.
2. Project risk associated with new projects.
3. The company has a history of corporate debt restructuring because some of its earlier plans had gone awry.
4. Concentration of order book to the main line shipping sector.
The chief purpose of the IPO is to assemble funds for construction of the shipyard and a sum of Rs.4,550 million has been earmarked for the same. Another important objective of the IPO funds are to generate margin for working capital and a sum of Rs. 2450 million has been assigned for the same.