Mumbai: Srei Equipment Finance, the Kolkata based financier of infrastructure equipment will sell equity shares as it seeks to raise money to fund its fledging growth prospects, the company said.
The company which is a wholly-owned subsidiary of the listed Srei Infrastructure FinanceBSE -1.29 % will dilute 25% of its share capital by the end of this fiscal year, vice chairman Sunil Kanoria said.
“We will do both a primary as well as a secondary issue. Srei Infra the parent company will also sell some of its stake and the remaining will be sold to new investors.
Listing norms say that a minimum of 25% of the shares have to be diluted and we will do only that much,” Kanoria said.
French banking group BNP Paribas held a 50% stake in Srei Equipment until December 2015. This stake was swapped for a 5% shares in the parent Srei Infrastructure Finance less than two years ago.
BNP Paribas had invested Rs 775 crore in the joint venture in 2008, just before the global financial meltdown in what was then one of the largest foreign direct investments in the country. However the 5% stake in Sre Infra was valued at just Rs 131 crore when it was swapped in December 2015, making the move a loss for the French bank.
Kanoria said the IPO when it is completed will be the first capital raising for Srei Equipment since 2008. “Growth in the company slowed down between 2012 to 2016 but now we see a pick up. The company’s capital adequacy is at 17% which will last for a few quarters and we need to prepare for double digit growth going forward,” Kanoria said.
Srei Equipment closed the first quarter of this financial year with Rs 23,453 crore of assets under management a growth of 20.38% over the same quarter of the previous year.
The company is betting on the government’s push to build roads, railways, ports, affordable housing and other infrastructure sub-sectors, for the rise in demand for construction and mining equipment.
The company’s board has constituted an IPO committee to appoint investment bankers and legal counsels for the issue.