Shyam Metalics trims IPO size, chases $1.06 bn valuation

 Shyam Metalics trims IPO size, chases $1.06 bn valuation

Shyam Metalics and Energy Ltd, a Kolkata-based steelmaker with a captive power plant, has trimmed the size of its forthcoming initial public offering that may value it around Rs 7,805 crore ($1.06 billion).

This would be the first offering by an Indian metal manufacturing company in a decade.

Shyam Metalics has set a price band of Rs 303-306 per share for its IPO that opens on June 14 and closes two days later. The anchor book for institutional investors will open on June 11, the company said.

The company has trimmed the IPO size to Rs 909 crore from Rs 1,107 when it filed the draft prospectus in February. The IPO now comprises a fresh sale of shares worth Rs 657 crore and a secondary market sale of Rs 252 crore from promoters. The promoters had earlier planned to sell shares worth Rs 450 crore.

The IPO will result in a stake dilution of 11.65% on a post-issue basis.

The company will use Rs 470 crore of the total net fresh proceeds to repay outstanding debt and an undisclosed amount towards general corporate purposes. The proceeds from the share sale will go to selling shareholders.

This is the company’s second attempt to go public. Shyam Metalics had originally filed its draft proposal with the Securities and Exchange Board of India in August 2018 with an aim to raise Rs 909 crore via a fresh issue of shares.

A successful IPO would see Shyam Metlaics join listed peers Tata Steel, JSW Steel, Jindal Steel & Power, and Tata Sponge Iron, among others.

ICICI Securities, Axis Capital, IIFL Securities, JM Financial, and SBI Capital Markets are the merchant bankers managing the IPO.

The steelmaker was incorporated in Kolkata in December 2002 as Shyam DRI Power Ltd. It began operations in 2005.

Shyam Metalics focuses on long steel products and ferro alloys. It also sells intermediate and final products. It is among the largest producers of ferro-alloys in India and the fourth-largest maker of sponge iron by installed capacity.

The company has three manufacturing plants, one in Odisha and two in West Bengal, with an aggregate installed capacity of 5.71 million tonnes a year. Its manufacturing sites also include captive power plants with an aggregate installed capacity of 227 MW.

The company plans to double its production capacity to 11.6 million tonnes by 2024-25, it said in a regulatory filing.

The Capital Quest