Afcons Infrastructure plans to raise up to Rs 8,000 crore through IPO

Afcons Infrastructure, the construction arm of SP Group, plans to raise up to Rs 8,000 crore via an IPO. The proceeds from the sale of shares will be used by the Group to pay off debts at the promoter level. Banking sources said that the group is in talks with SBI Capital and ICICI Securities to start selling shares in the current fiscal year.

Fundraising for the promoters is crucial as the group is heavily indebted both at the promoter level and at the operating corporate level. On Monday, Goswami Infratech raised Rs 14,500 crore at a coupon rate of 18.5 per cent – showing the pressure on the group.

Bankers said the sale of Afcons shares would help the group ease pressure at the promoter level. A banker close to the project said the group is also considering the option of selling the entire stake in Afcons but there are no operators.

The group was also planning to sell the Port of Jobalpur to raise up to $2 billion but the deal has yet to materialize.

The group is also restructuring its operations with SP Construction acting solely as an operating holding company for the construction business. The properties as well as other business segments will be divided under separate companies, which will also be owned directly/indirectly by the promoters.

The restructuring is likely to free up capital in these segments, as well as potentially limit additional funding requirements in these businesses from the SPCPL. This is expected to support SPCPL’s credit quality due to Consolidated Debt Downgrade, Corporate Guarantees, ICRA’s rating statement said in May this year. In the past three years, the group sold its consumer products company Eureka Forbes, Sterling & Wilson to pay off debt. Banks estimate total consolidated debt at Rs. 36,000 crore at promoter and operating company level.

An email sent to the SP group elicited no response.

First published: June 29, 2023 | 12:40 a.m ist