Govt appoints four i-banks for Mazagon Dock Shipbuilders IPO

THE PROPOSED ISSUE IS LIKELY TO BE A PURE OFFER FOR SALE AND COULD SEE THE CENTRAL GOVERNMENT DIVEST A MINIMUM 10% OF ITS STAKE

MUMBAI: The department of investment and public asset management (DIPAM) has appointed investment banks for the initial public offering (IPO) of state-owned Mazagon Dock Shipbuilders Ltd (MDL), two people aware of the development said.

MDL caters to the nation’s strategic requirements, making ships for the navy and other buyers. It was established in 1934. In 1960, the government took over the company.

The proposed IPO is likely to be a pure offer for sale and could see the government divest a minimum 10% of its stake, said one of the persons cited above on condition of anonymity as he is not authorised to speak to the media.

“The planned IPO will likely see the government sell anywhere between 10-15%. Presentations for hiring bankers were held a couple of week ago and the government has appointed four banks, Yes Securities, Edelment weiss, Axis Capital and JM Financial to manage the share sale,” this person added.

According to a second person, who also spoke on condition of anonymity, the IPO could fetch the centre ₹1,000-1,500 crore.

“Very few defence stocks are available in the market; such as Bharat Electronics Ltd and BEML Ltd. Given this shortage, one can expect a strong investor appetite for Mazagon Dock’s IPO,” he added.

A spokesperson for DIPAM declined comment on the development. An email sent on Tuesday to Mazagon Dock was not answered. “As a matter of policy, YES Securities does not com- on company specific information,” a spokesperson for the firm said in an email. Emails sent to Axis Capital, JM Financial and Edelweiss did not elicit a response.

Mazagon Dock has made ships for other customers in India and abroad and also supplied rigs and other offshore drilling related equipment to stateowned oil and gas firm ONGC.

MDL is currently working on three major warship building projects and one submarine project.

In 2015-16, the shipyard reported revenue of ₹4,121.65 crore, as against a revenue of ₹3,592.6 crore the previous year. In 2015-16, it reported a profit of ₹637.82 crore, as compared to ₹491.59 crore the previous financial year. The company had a net worth of ₹2,846 crore as of 31 March 2016.

Apart from Mazagon Dock, the government has also lined up the initial share Cochin Shipyard Ltd, which filed its draft IPO papers with the markets regulator in March.