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Wednesday, April 26, 2006

Patel Engg follow-on offer opens on May 3, 2006

The follow-on public offer, FPO of Patel Engineering, a civil-infrastructure construction company, is scheduled to open for subscription on May 3, 2006 and close on May 9, 2006, as per the company announcements.

The FPO is for fresh equity shares of Re 1 each for cash at a premium, at a price to be determined through the 100% book building process.

Patel Engineering is raising funds to make investments in infrastructure projects and capital equipment, repayment of contractee advances/debt and for additional working capital. The company also intends to bid for projects on an Annuity, IPP, BOT or BOOT basis and also invest in subsidiaries and joint ventures within and outside India.

Studies and estimates from the Plan Documents indicate an investment of over Rs 8,500 billion into various Indian infrastructure projects over the next five years. The biggest beneficiaries of these investments are likely to be construction companies since civil construction component accounts for around 50-65% of the total infrastructure spending.

Patel Engineering has seen a huge jump in order book position in the last two years on the back of increased infrastructure spending. The company would like to further capitalize and benefit from the growth momentum. The fund raising program will facilitate the company’s structured growth plan for expansion through organic and inorganic means.

The company’s consolidated order book position (the estimated balance value of work) as at December 31, 2005 is Rs 4339 crore (Rs 43.39 billion), which is 5.58 times the consolidated revenues of the company as on March 31, 2005. The company has been a major player in the sectors which have high government attention like hydro power and irrigation sectors. These critical and high quality business segments of Hydropower and Irrigation account for 39.18% and 37.64% respectively of the consolidated order book as at December 31, 2005.

ICICI Securities and Enam Financial Consultants Private are the book running lead managers to the FPO. Intime Spectrum Registry is the registrar to the FPO.

An ISO 9001-2000 certified company set up in 1949, Patel Engineering has blossomed into a front-runner civil engineering construction company in the country with many achievements to its credit. The company has executed projects in the field of tunnelling, underground works for hydroelectric & irrigation projects, nuclear and thermal power projects, bridges and marine works and public health projects. The company has two high technology companies namely, ASI RCC Inc and Westcon Microtunnelling Inc. for undertaking and executing complex projects in various parts of the world including India.

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