Jhunjhunwala may make 30-fold profit from A2Z IPO

The price band for the issue has been fixed at Rs 400-410.

Billionaire investor Rakesh Jhunjhunwala may make a 30-fold profit from his investment in A2Z Maintenance & Engineering Services Ltd should the company sell shares at the top-end of the range during its initial public offer (IPO).

The public offer of A2Z Maintenance & Engineering, in which Jhunjhunwala has 21.03 per cent stake, will remain open for subscription between December 8 and December 10. The price band for the issue is fixed at Rs 400-410.

Jhunjhunwala, named India’s Warren Buffett by Forbes magazine, paid about Rs 23 crore to purchase a 30 per cent stake in the company in 2006. A2Z, which provides services to power generation and transmission companies, and existing investors plan to sell as much as Rs 862 crore of stock in public offer, with Jhunjhunwala selling 500,000 shares.

A2Z is raising money to tap increasing demand for electricity transmission lines and renewable energy projects to feed companies in Asia’s second-fastest growing major economy. Prime Minister Manmohan Singh’s government plans to invest about $1.5 trillion in the 10 years to 2017 to improve transport and power networks, which are ranked below those of Sri Lanka and war-ravaged Ivory Coast.

“India needs infrastructure” as economic growth accelerates, Jhunjhunwala said at a briefing today. The country’s gross domestic product climbed 8.9 per cent for a second straight quarter in July to September.

Jhujhunwala said he paid “below” Rs 14 apiece to buy stake in the company in 2006. He sold a nine per cent stake to a private equity firm before the IPO. A2Z and its investors plan to sell shares for Rs 400-410 each, according to a statement from the company today.