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September 06, 2008


Pipavav Shipyard to float IPO to finance a new shipyard

Pipavav Shipyard Limited is planning an initial public offering to part finance the construction of a shipyard complex at Pipavav.

The shipyard will have an estimated investment of INR 2,888 crore and it proposes to part finance this project cost with the help of INR 1,248.67 crore including premium raised through equity and term loans from banks and financial institutions to the tune of INR 935.2 crore.

To meet the remaining funding requirement, Pipavav Shipyard proposes to enter the capital markets with a public issue of 86,850,000 equity shares of INR 10 each through 100% book building process. It has already filed draft red herring prospectus with the Securities & Exchange Board of India for the purpose. JM Financial Consultants Private Limited, Citigroup Global Markets India Private Limited and Enam Securities Private Limited are the book running lead managers for the issue. SBI Capital Markets Limited, Kotak Mahindra Capital Co Limited and Motilal Oswal Investment Advisors Pvt Limited are the co BRLMs for the issue. IL&FS Investsmart Securities Limited is the advisor to the proposed offerings.

Pipavav Shipyard is constructing the shipyard based upon the principle of concurrent shipbuilding, which involves the production of vessels while simultaneously completing construction of the shipyard. The construction of the Pipavav Shipyard, being conducted on an owner managed basis, is expected to be completed in October 2008. It has agreements with 3 international ship owners for the construction of 26 Panamax bulk carriers of 74,500 DWT each for delivery from 2009 to May 2012 at an aggregate contract value of USD 1,063.12 million.

Pipavav Shipyard was originally promoted by SKIL Infrastructure Ltd and Grevek Investments. Punj Lloyd has now joined as a co promoter through its acquisition of 129,361,538 equity shares of the company. As a co promoter, Punj Lloyd has agreed to conduct all of its offshore business, excluding the construction and fabrication of sub sea pipelines.