Water utility company Vishvaraj Environment has received SEBI’s approval for its IPO worth Rs 2,250 crore. The company had filed its draft paper with the market regulator in October.
When a company receives SEBI’s nod, it essentially means that the market regulator has reviewed and cleared its DRHP, allowing the entity to move ahead with its final preparations like share price band, launch date, etc.
The IPO is a book-built issue comprising fresh equity worth Rs 1,250 crore, while the remaining capital worth Rs 1,000 crore will be raised via the offer for sale route.
Here are three key details you should know about the issue:
#1 Vishvaraj Environment IPO: Offer size and BRLMs
The company’s offer worth Rs 2,250 crore comprises issuance of fresh equity worth Rs 1,250 crore, while the promoter group, Premier Financial Services, will offload shares worth Rs 1,000 crore of face value Rs 5 each through the OFS route.
The book-running lead managers for the IPO are JM Financial, Axis Capital, and DAM Capital Advisors, while MUFG Intime India is the registrar to the issue.
#2 Vishvaraj Environment IPO: Utilization of net proceeds
Of the total Rs 1,250 crore capital raised via fresh equity, the company will deploy Rs 545 crore towards investment in its subsidiaries. Over Rs 178 crore will be utilised for funding the capital expenditure of its subsidiary in Nagpur, while Rs 112 crore and Rs 124 crore will be utilized to build its other advanced water treatment plants.
The remaining proceeds will be deployed to meet its general corporate purposes.
#3 Vishvaraj Environment IPO: Key risks
The company is highly dependent on its water utility and waste management projects for its revenue generation, having derived over 95% of its revenue for the last three fiscal years from this segment, which makes it vulnerable to the risk of segment concentration.
Vishvaraj Environment is also highly dependent on government projects and EPC contracts for its revenue generation, adding to the risk of high revenue concentration from the same segments.
Additionally, risk factors pertaining to client concentration, state concentration, related party transactions, reduction of government incentives, debt repayment, and legal and regulatory proceedings should be monitored.
