Green Light for Azad Engineering: SEBI Approves Rs 740-Crore IPO

14 Dec 2023 , 07:49 PM

Telangana-based Azad Engineering has received approval from the Securities and Exchange Board of India (SEBI) to proceed with its Rs 740-crore initial public offering (IPO). The IPO comprises a combination of fresh shares valued at Rs 240 crore from the company and an offer-for-sale (OFS) of shares worth Rs 500 crore by existing shareholders.

SEBI’s observation letter, issued on December 5, signifies that the company can launch its IPO within the next year. The IPO filing, submitted by Azad Engineering on September 29, includes plans for Promoter Rakesh Chopdar to sell Rs 170 crore worth of shares in the OFS, Piramal Structured Credit Opportunities Fund to divest shares worth Rs 280 crore, and DMI Finance to offload Rs 50 crore worth of shares.

The company’s promoters currently hold 86.51 percent of Azad Engineering, while public shareholders, including Piramal Structured Credit Opportunities Fund, own the remaining 13.49 percent. Additionally, Azad Engineering may consider raising Rs 48 crore through private placements, rights issues, or preferential offers before filing the red Herring Prospectus with the Registrar of Companies. In the event of a pre-IPO placement, the fresh issue size will be reduced accordingly.

Azad Engineering specializes in manufacturing engineered precision forged and machined components for global original equipment manufacturers in industries such as aerospace and defense, energy, and oil and gas. The company plans to allocate Rs 60.4 crore for capital expenditure, Rs 138.2 crore for debt repayment, and the remaining funds for general corporate purposes. As of June 2023, Azad Engineering’s borrowings stood at Rs 157.41 crore.

Axis Capital, ICICI Securities, SBI Capital Markets, and Anand Rathi Advisors are the appointed merchant bankers for the IPO.