Motilal Oswal PE set for part exit through Power Mech IPO
India's Motilal Oswal Private Equity is set to make a partial exit from Hyderabad-based power infrastructure service provider Power Mech Projects, which has filed for an IPO.
According to the draft red herring prospectus, the company is looking to sell 4.27 million shares, comprising 2.13 new shares and 2.14 million existing shares. Of the existing shares being put up for sale, 2.13 million are held by Motilal Oswal-managed India Business Excellence Fund I and related entities.
The PE firm invested INR250 million in the company in 2009 and now holds 19.89%. Following the IPO, it will be left with a 2.55% stake, assuming the offer is fully subscribed.
Power Mech provides power infrastructure services, civil works, and operation and maintenance (O&M) services. This includes the erection, testing and commissioning of boilers, turbines and generators. It also serve clients in the petrochemicals, steel and cement industries.
In June this year, the firm entered into an agreement with Chengdu Pengrun New Energy Development Company to set up a joint venture entity in Hong Kong for the distribution of equipment and spare parts, including boilers, turbines and generators, for O&M projects in India.
The company's aggregate order book as of June was INR31.9 billion ($637 million). The business has four regional offices in Ghaziabad, Nagpur, Mumbai and Kolkata, in additon to its Hyderabad headquarters. Power Mech posted INR11.9 billion in revenue for the year ended March 2014, up from INR9.4 billion the previous year. Net profit was INR683.1 million, up from INR501.1 million.
The company will use INR1.2 billion crore for proceeds for working capital requirements and INR245 million will be used to pay off debt. Kotak Mahindra Capital, India Infoline and Motilal Oswal are the book running lead managers.
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