The flagship engineering and construction firm of Shapoorji Pallonji group, Afcon Infrastructure’s IPO price band has been set at ₹440-463 a share, the issue opening on October 25 and closing October 29.

The IPO size has been scaled down to ₹5,430 crore from ₹7,000 crore earlier, with a lower offer-for-sale component. However, Goswami Infratech, the promoter selling shareholder, is divesting more through a pre-IPO placement and the offer for sale in the IPO, which together comes to ₹7,147 crore compared to ₹5,750 crore before.

Investment bankers said the pre-IPO placement was made to satisfy institutional investor appetite, and it has been subscribed by sovereign funds such as GIC of Singapore, family offices and some mutual funds.

Rating downgrade

Goswami Infratech has considerable debt on its books and last month got an extension for a repayment due September 30, 2024, on its NCDs. It has been granted extension till December 31, 2024. This prompted rating agency CARE Ratings to downgrade its credit rating to BB- from BB. The funds raised through pre-IPO and in the IPO are expected to be used to repay its debt.

The proceeds from Afcons fresh issuance will be utilised to the extent of ₹80 crore for capital expenditure for purchase of construction equipment, ₹320 crore for funding long term working capital requirements, ₹600 crore for prepayment or scheduled repayment of a portion of certain outstanding borrowings and acceptances availed by the company and general corporate purposes.

At the end of March, Afcons Infrastructure had an order pipeline of over ₹31,000 crore and since then it has added around ₹19,000 crore worth of orders in FY25 so far. Two of the big projects that it is undertaking is the tunnelling project for Mumbai to Ahmedabad bullet train and a $500-million project connecting four islands in the Maldives.

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