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PSP Projects IPO subscribed 27% on Day 2

LiveMint logoLiveMint 18-05-2017 Anuradha Choudhary

The initial public offering (IPO) of Ahmedabad-based construction company PSP Projects Ltd was subscribed merely 27% on Wednesday, the second day of a three-day offering.

As of 5pm, shares set aside for non-institutional investors (corporate bodies and wealthy individuals) were subscribed just about 16%, while retail investors bid for 1.1 times their quota, stock exchange data showed.

The qualified institutional investors’ portion, which did not receive any bid at all on the first day, received muted response on Day 2 as well, with just 0.4% subscription. The issue closes on 19 May.

PSP Projects has fixed a price band of Rs205-210 per share. It plans to sell as many as 10.08 million shares, which at the upper end of the price band will raise Rs211.6 crore, including a primary fund-raise of Rs151 crore. This will result in an overall dilution of 28% on a post-issue basis.

Ahead of the IPO, PSP allotted 4.53 million shares to nine institutional investors at the upper end of the price band, raising about Rs95.25 crore. The anchor book allocation of the company saw subscription from investors such as Reliance Mutual Fund, SBI Mutual Fund, Axis Mutual Fund, Sundaram Mutual Fund and Birla Sun Life Insurance.

Other infrastructure firms that went public in the past around two years include Shankara Building Projects Ltd, Sadbhav Infrastructure Project Ltd, PNC Infratech Ltd, MEP Infrastructure Developers Ltd and Dilip Buildcon Pvt. Ltd.

PSP Projects had filed draft prospectus for an initial share sale on 29 December and received regulatory clearance on 24 March.

Karvy Investor Services Ltd and Motilal Oswal Investment Advisors Ltd are managing the initial share sale.

PSP Projects reported revenue of Rs467.7 crore for the year ended 31 March 2016, as compared with Rs286.9 crore the previous year. It posted a profit of Rs24.9 crore in 2015-16, against Rs14 crore the previous year. For the nine months ended 31 December, the company posted revenue of Rs249.4 crore.

PSP Projects offers construction and allied services across industrial, institutional, government and residential projects. Its services include planning and design as well as construction and post-construction activities. Since its founding in August 2008, the company has executed 80 projects.

Gujarat has been the company’s focus region, though it has recently started bidding for projects across India.

Some of the major projects handled by PSP Projects include the construction of GCS Medical College, Hospital and Research Centre (managed by the Gujarat Cancer Society) and the Zydus Hospital at Ahmedabad, and various works in relation to the Sabarmati Riverfront Development project at Ahmedabad.

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