Cochin Shipyard plans IPO, to raise up to Rs1,500 crore

State-owned Cochin Shipyard Ltd (CSL) on Thursday filed draft red herring prospectus (DRHP) with markets regulator Securities and Exchange Board of India (Sebi) for an initial public offer (IPO).

CSL, India's largest public sector shipyard, is looking to raise an estimated Rs1,500 crore (around $230 million) from its the maiden share sale, expected in the coming financial year.

The IPO would value Cochin Shipyard at an estimated Rs4,000 crore (around $612 million).

The public issue comprises a fresh issue of 22.65 million shares besides an offer for sale of 11.32 million shares by the government, as per the draft papers.

CSL intends to use the net proceeds from the IPO for setting a new dry dock and for setting up an international ship repair facility at Cochin Port Trust area besides general corporate purposes.

The equity shares will be of a face value of Rs10 and the sale the price band will be decided in consultation with the book running lead managers.

SBI Capital Markets, Edelweiss Financial Services, JM Financial Institutional Securities are the book running lead managers to the issue and Link Intime India is the registrar.

The offer will result in a stake dilution of 25 per cent, including the government's divestment of a 10 per cent stake, according to DRHP. This will make the company compliant with the Sebi listing norms of 25 per cent minimum public holding.

The IPO is part of the government's divestment programme for the forthcoming financial year.

The government is aiming to raise Rs72,500 crore through capital receipts that comprise minority sales and strategic disinvestments as well as via listing of state-owned companies, including insurance firms.

The government also intends to initiate share sale in unlisted companies such as aerospace and defence company Hindustan Aeronautics Ltd and Airport Authority of India Ltd, among half a dozen firms.

State-owned housing and urban infrastructure financing company Housing and Urban Development Corporation Ltd (Hudco) is also looking to go public with a 10 per cent stake sale by the centre.