India: Construction firm Montecarlo eyes up to $100m through IPO

Photo: Livemint

Ahmedabad-based construction company Montecarlo Ltd has started work on its initial public offering to raise up to $100 million, two people aware of the development said.

Montecarlo, founded in 1995, offers services across infrastructure projects such as highways, roads, irrigation, water supply, mining, power transmission and distribution, building and urban infrastructures.

“Montecarlo has appointed investment bank Edelweiss Financial Services Ltd to start work on its proposed IPO. The company is looking to raise around Rs500-600 crore through the IPO. Several EPC (engineering,procurement and construction) companies are looking to tap the capital markets, but Montecarlo is a quality name in the industry,” said one of the two people cited above, requesting anonymity, as he is not authorized to speak with the media.

The Montecarlo IPO is likely to be a mix of primary and secondary share sales, according to the second person cited above, who also requested anonymity.

Emails sent on Friday to Montecarlo did not elicit any response. Edelweiss declined to comment.

Last year, Mint reported that Montecarlo was undergoing a restructuring exercise to separate its real estate and EPC business, with an eye on taking the EPC business public.

The restructuring is “to segregate between core business being infrastructure development (highways, railways, water, mining, energy and building and factories) and non-core activities, and thereby make Montecarlo Ltd (MCL) hold only the core business, while the non-core business could be housed into SPVs /demerged entities,” a company spokesperson had told Mint.

“This brings focused attention of management, helps in strategizing, eliminates valuation discounting and also gives clarity to investor community while taking MCL public.”

Montecarlo’s revenue rose to Rs1,640.25 crore in 2015-16 from Rs1,063.93 crore in the previous year, according to data from the company’s filings with the Registrar of Companies (RoC). Profit rose to Rs93.11 crore from Rs62.96 crore in the previous year, RoC data showed.

Several EPC companies have used the opportunity presented by the buoyant IPO market to raise funds through public offerings.

Jodhpur-based HG Infra Engineering Ltd was set to launch its Rs462 crore initial public offering on 26 February, Mint reported on 17 February. HG Infra is an infrastructure construction, development and management company with a focus on road projects, including highways, bridges and flyovers.

In May, PSP Projects raised Rs211 crore through its initial share sale. PSP Projects is a multi-disciplinary construction company offering a diversified range of construction and allied services across industrial, institutional and residential projects in India.

Other EPC companies which have tapped the IPO market in recent times include Capacit’e Infraprojects Ltd, Power Mech Projects and PNC Infratech Ltd.

In 2017, 36 companies raised Rs67,147 crore through the IPO route, while 26 companies raised Rs26,493.8 crore in 2016, data from primary market tracker Prime Database shows.

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