GIC invests in Blackstone-backed Sona BLW; Hedge funds, AIFs bet on Shyam Metalics

 GIC invests in Blackstone-backed Sona BLW; Hedge funds, AIFs bet on Shyam Metalics

Singapore sovereign wealth fund GIC Pte Ltd has invested in auto-parts maker Sona BLW Precision Forgings Ltd while a couple of Indian hedge funds have backed Shyam Metalics and Energy Ltd ahead of their initial public offerings.

GIC invested Rs 401.5 crore ($54.8 million) in Blackstone-backed Sona BLW as part of an anchor allotment of shares. Sona BLW raised a total of Rs 2,497.5 crore from more than two dozen anchor investors by selling 85.8 million shares at Rs 291 apiece.

Apart from GIC, other foreign institutional investors that took part in the anchor allocation included affiliates of Japan’s Nomura, French asset manager Amundi, and US-based firms Fidelity, Goldman Sachs and Morgan Stanley. Several local mutual funds and insurance companies also invested in Sola BLW.

The IPO of the auto-parts maker, jointly promoted by Sunjay Kapur and Blackstone, will open June 14 and close two days later. The total size of the IPO is Rs 5,500 crore ($750 million). A bulk of this will go to Blackstone, which is set to make its juiciest exit in India, The Capital Quest reported previously.

The world’s largest private equity firm by assets under management owns 66% of Sona BLW. The IPO will see the Blackstone-backed company’s valuation rocket more than 10 times in less than two years.

Sona BLW had received the regulatory nod to go public last month. It has appointed Kotak Mahindra Capital Co, Credit Suisse Securities (India), JM Financial, JP Morgan India and Nomura Financial Advisory and Securities (India) as merchant bankers to manage the share sale.

Shyam Metalics

The Kolkata-based steelmaker raised about Rs 270 crore by allotting 8.82 million shares at Rs 306 apiece to 21 anchor investors, including four local mutual funds and two insurance companies.

Abakkus Asset Manager LLP, a Mumbai-based hedge fund set up by former Reliance Capital Ltd executive Sunil Singhania, invested Rs 15 crore. Ashoka India Opportunities Fund, a hedge fund established by former Goldman Sachs executive Prashant Khemka, contributed Rs 25 crore.

A couple of alternative investment funds set up by Edelweiss Group and IIFL also came in as anchor investors.

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 IPO may value it around Rs 7,805 crore ($1.06 billion).

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.

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

Sumit Upadhyaya

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