MEP Infra IPO sails through on institutional participation

Rs 325 crore-offering by company, promoted by Mhaiskar family of IRB Infrastructure Developers, received 1.1 times subscription

Road toll collection company MEP Infrastructure Developers’ Initial Public Offering (IPO) just about managed to garner full subscription, led by participation from institutional investors.

The Rs 325-crore offering of the company, promoted by Mhaiskar family of IRB Infrastructure Developers, received 1.1 times subscription. The retail investor category remained undersubscribed at 95 per cent.

MEP Infrastructure, which operates toll plazas at about 30 locations, will use the proceeds to retire some debt. The company had priced the offering  between Rs 63 and Rs 65 per share. MEP had raised around Rs 72 crore from anchor investors, which included Tata and HDFC Mutual Fund.

Market experts said the IPO failed to enthuse many investors due to lack of a profitability record and high debt. MEP Infra, which manages the toll station at Mumbai’s five entry points, had debt of nearly Rs 2,800 crore at the end of January. The company reported a loss of Rs 143 crore for 2013-14.

Analysts said it’s business model is asset-light but the high debt is on account of Rs 2,100 crore upfront payment made to bag the Mumbai toll contract.

The subscription received to MEP Infra's IPO was muted compared to some of the previous two offerings of VRL Logistics and Inox Wind.

Next week, digital cinema distribution firm UFO Moviez's Rs 600 crore will open for subscription. The MEP IPO was managed by IDFC Securities, IDBI Capital Market Services and Inga Capital. Including MEP Infra, five companies have successfully managed to raise capital through IPOs in 2015.