CMR Green Technologies IPO : 7 things to know
CMR Green Technologies Ltd, one of India’s aluminium metal recyclers, had filed its draft red herring prospectus (DRHP) in September 2021 and SEBI has already approved the IPO in late-February 2022.
However, due to the fairly volatile market conditions and IPOs reducing to a trickle, the company is yet to announce the dates of its IPO. By the time the IPO was approved in late February, the digital IPO fall had already happened, the war like situation in Ukraine was emerging and the LIC IPO was on the anvil.
All these factors put together are holding the company from announcing its IPO dates. It is likely to announce the IPO only in the next financial year.
7 important things to know about the CMR Green Technologies IPO
1) CMR Green Technologies Ltd has filed for an IPO comprising of a fresh issue combined with an offer for sale. The total size of the issue would only be known once the price band is fixed. For now, what we know from the prospectus is that fresh issue portion will be Rs.300 crore, while the company early investors and the promoters will offer 3,34,14, 138 equity shares as part of the offer for sale (OFS).
The company is into the niche space of aluminium recycling, which is also considered to be an environment friendly and an ecology boost economic activity.
2) Out of the total issue size in the CMR Green Technologies IPO, let us look at the OFS portion of Rs.3.34 crore shares first. The OFS will entail the sale of stocks by the promoters and also by some of the early investors. Among the major sellers tendering shares in the OFS, Gauri Shankar Agarwal Holdings will offload 34.33 lakh shares while Kalawati Agarwal will offload 33.45 lakh shares.
In addition, the promoter Pratibha Agarwal will also offload 30.09 lakh shares as part of the OFS. Apart from the promoter group, early investor Global Scrap Processors will also offload a total of 199 lakh shares in the OFS and will be the biggest contributor to the OFS of CMR Green Technologies Ltd.
3) The fresh issue component will comprise of fund raising to the tune of Rs.300 crore, which will be capital dilutive and also EPS dilutive for the company. The Rs.300 crore net of issue expenses will come into the company as fresh funds.
The company plans to allocate these fresh funds towards payment of debt and pre-payment where possible. This will be the predominant usage of the fresh funds raised of Rs.300 crore raised by CMR Green Technologies Ltd. A small part of the funds raised will also be used for the purpose of general corporate expenses..
4) In addition to the actual IPO, the company, CMR Green Technologies Ltd, is also planning a pre-IPO placement of around Rs.60 crore ahead of the IPO. Typically, this pre-IPO placement is done well ahead of the IPO and gives leads on the pricing of the IPO.
One of the big advantages of the pre-IPO placement is that the company is allowed to place shares with HNIs, family offices and qualified institutional buyers in a manner that they have discretion on price of allotment.
If the pre-IPO placement is successful, then the company will reduce the size of the fresh issue proportionately. This is different from the anchor portion, which has a shorter lock-in but has to be only done at IPO price.
5) CMR Green Technologies Ltd is primarily engaged in the recycling of aluminium, which essentially entails processing of aluminium based metal scrap to manufacture aluminium alloys. This reduces the harmful environment effects of manufacturing aluminium and also supplies the output either in liquid form or in the form of ingots.
In addition, CMR Green Technologies Ltd also manufactures zinc alloys. Aluminium is highly power intensive and this process also saves power in the process.
6) CMR Green Technologies Ltd is operating 12 manufacturing facilities across India and is also in the process of setting up a cold refining plant in the state of Gujarat. This plant is likely to reduce logistics costs and expand operating efficiency of the business.
7) The IPO of CMR Green Technologies Ltd will be lead managed by Axis Capital, ICICI Securities and JM Financials. They will act as the book running lead managers or BRLMs to the issue.
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