Afcons Halts Loan Repayment to Shapoorji After SEBI Scrutiny Over IPO Funds

Afcons Halts Loan Repayment to Shapoorji: Shapoorji Pallonji Finance Pvt Ltd which is part of Afcons’s promoter group, gave the construction company Afcons Infrastructure a loan, and the Afcons company to repay the loan planned to use the funds raised from its public subscription but now the construction company has dropped the idea.

The company in a notice to SEBI said that the decision came after getting feedback on its draft red herring prospectus from the stock exchanges and Securities and Exchange Board of India (SEBI).

This shows that SEBI is focusing more on IPO documents as a large number of companies are launching their IPOs because their primary market performing well.

Thus, this makes the small investors who want to earn large funds to invest in IPOs.

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According to the plans noted in the drafts red herring prospectus filed on March 28, Afcons stated that the company will use the funds raised from the IPO to repay a Rs 100 crore loan facility which was provided by the Central Bank of India and Shapoorji Pallonji Finance Pvt Ltd.

The drafts further state that the Central Bank of India owns 75% of the facility, while Shapoorji Pallonji Finance owns 25%.

This Rs 100 crore loan was taken by the company in July 2023 to fund its working capital needs and to pay vendors and has an interest rate of 10.95%.

Among the Rs 1,250 crore that was supposed to be raised through the IPO, the company set aside Rs 500 crore to pay back some loans that Afcons took before.

The rest of the money will be used to pay back other lenders including State Bank of India, DBS Bank, and HSBC.

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On September 30, 2023, the net debt of the company went up to Rs 2,172.4 crore from Rs 1,234.8 crore as of March 31, 2023.

According to the reports, an email that was sent to Afcons didn’t receive any answer till the time of publishing the draft.

The Afcons IPO issued shares worth Rs 7,000 crore and Goswami Infratech Private Limited, the promoter of the company will issue 5,750 crore worth of shares and the company will also issue 1,250 crore worth of new shares.

Over the past 10 years, the Shapoorji Pallonji group has constructed a total of 76 projects across 15 countries which is worth around Rs 52,220 crore.

However, Afcons currently has 67 active projects in 13 countries with an order book worth Rs 34,888 crore.

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