Chennai-based VA Tech Wabag Ltd, a water management company, plans to raise around Rs 475 crore through its initial public offering (IPO). The price band for the issue has been fixed atRs 1,230 to Rs 1,310 per equity share of Rs 5 each, aggregating Rs 125 crore.
Speaking to reporters here on Wednesday, Rajiv Mittal, VA Tech’s managing director, said that of the total proceeds, Rs125 crore would be used to set up an integrated IT system and Enterprise Resource Planning (ERP) system to connect its Chennai corporate office with 18 countries to monitor ongoing projects.
Currently, the company has order book of Rs 2,800 crore, which will be executed over the next two years. Of this, 40 per cent is from overseas customers, and the company aims to raise this to 50 per cent over the next 2-3 years. Its focus regions would be emerging markets including north Africa, China, West Asia, Central and Eastern Europe.
The company has reported a turnover of Rs 1,250 crore in 2009-10, a CAGR of 40 per cent over the last three years, said Mittal. On the IPO, he said the company was making an offer for sale of 26,53,383 equity shares by India Advantage Fund I, Dynamic India Fund I, Rainbow Fund Trust, GLG Emerging Markets Fund and Passport India Investments (Mauritius) Ltd.
Following the offer for sale, the ICICI Venture Capital's holding will come down to 15 per cent from 25 per cent. ICICI Venture holds stake through its three funds, namely India Advantage Fund I, Dynamic India Fund I, Rainbow Fund Trust in the company.
The company proposes to use Rs 64.50 crore for funding working capital requirement and Rs 34.74 crore for construction of corporate office here.
The company also has Rs 220 crore cash on the balance sheet which would be used for acquisitions. “If we leave out this amount (the Rs 220 crore), our valuation is around Rs 1,000 crore and the company is debt-free,” Mittal said.
VA Tech Wabag offers complete life cycle solutions including conceptualisation, design, engineering, procurement, supply, installation, construction and operations and maintenance (O&M) services.