Nagpur: The Initial Public Offer (IPO) of Rs 2.96 crore by city-based M/s DRA Consultancy, on whose model Nagpur Municipal Corporation (NMC) came up with the 24X7 water supply system, has been oversubscribed 12 times. The company has raised capital through the Small and Medium Enterprises (SME) segment of Bombay Stock Exchange (BSE).
This is said to be the highest ever rate of over subscription for an IPO in the SME segment. The promoters have offloaded 25% of their share in the company and plan to invest the proceeds in acquiring new technology.
The SME segment was started in 2011 to provide small and mid-sized industries access to capital markets. The minimum size of an IPO has to be Rs 50 lakh but it should not exceed Rs25 crore either. Here, the targeted investor is mainly financial institutions, with not much participation expected from retail investors. The minimum ticket size for investment is Rs 1 lakh.
DRA Consultancy Director Dinesh Rathi told that the company is into providing advisory services for urban infrastructure, specializing in water supply and water recycling sectors. “It was based on our concept that NMC came up with the 24X7 water supply model. We are offering services to civic bodies in Gujarat, Madhya Pradesh, Rajasthan, West Bengal and Chhattisgarh,” he said.
Rathi said the funds will be used to acquire new technology. This includes software for investigation and audit of water supply network under a civic body. Robots will be acquired for examination of sewer lines in the city areas. The company had posted turnover of Rs16 crore and maintained an average profit margin of 20%, he said. DRA Consultancy also plans to set up permanent offices in cities like Indore, Pune, Jaipur. Ahmedabad and Kolkata, apart from Nagpur.
Mahavir Lunawat, Managing Director of Pantomath Capital Advisors, the investment banker to DRA Consultancy, said, “Normally IPOs in the SME segment are oversubscribed in the range of 2-3 times. However, 12 times is a record indeed. The IPO attracted investments from reputed financial institutions like Edelweiss Capital too.”
As the SME segment of BSE is picking up, Maharashtra leads in terms of companies raising capital through this mode. Out of the 54 companies listed so far, 43 are from Maharashtra
Pantomath is also in the process filing draft red-herring prospectus (DRHP) for 3-4 more companies from Nagpur planning to get listed in the SME segment. The businesses are in sectors like food, manufacturing and engineering, said Lunawat.
The state government has also announced it would set up a Rs200 crore fund to assist SME IPOs. The plan is yet be implemented. It could prove to be of major help to small and mid-sized industries planning to tap the capital market, he said.
Source: Times of India
