PKH Ventures IPO : 7 things to know
PKH Ventures Ltd, a construction, development and hospitality management company, had filed its draft red herring prospectus (DRHP) in late September 2021 and SEBI is yet to give its observations and approval for the IPO.
Normally, the IPOs are approved by SEBI within a period of 2 to 3 months unless there are other queries or clarifications that the regulator has. The PKH Ventures IPO will be a combination of a fresh issue and an offer for sale and the next process will be commenced once the approval from SEBI is received.
7 important things to know about PKH Ventures IPO
1) PKH Ventures Ltd has filed for an IPO with SEBI which comprises of a fresh issue of 243 lakh shares and an offer for sale of 50 lakh shares. However, since the price band for the proposed IPO has not been announced still, the size of the fresh issue / IPO / offer for sale is not precisely know.
However, the company has disclosed in the draft red herring prospectus that the total size of the issue would be around Rs.500 crore.
2) Let us talk about the offer for sale (OFS) portion of the IPO first. A total of 50 lakh shares will be sold by the promoters as part of the offer for sale. The OFS component will not result in any fresh fund infusion or dilution of the capital or the EPS.
However, the selling of stake by the promoter will increase the free float of the company and facilitate listing of the stock.
3) The fresh issue portion of 243 lakh shares will be approximately equivalent to Rs.415 crore while the offer for sale portion will be equivalent to around Rs.85 crore. The final numbers will only be known once the price band is set for the IPO.
The proceeds of the funds of approximately Rs.415 crore raised through the IPO will be utilised for developing the Halaipani Hydro-power Project as well as the development of Phase I of Amritsar Real Estate project. Some part of the funds raised will also be used by the company for working capital requirements and for general corporate purposes. The break up will be as under.
A sum of Rs.136 crore will be invested in the Halaipani Hydro Project. A sum of Rs.100 crore will be invested by way of equity in development of the Amritsar Project. Another Rs.60 crore will be invested in Garuda Construction for funding its working capital requirements. Some funds will be used for general purposes.
4) The business model of PKH Ventures is spread across 3 business verticals viz. construction & development, hospitality and management services. Its construction business is run through its subsidiary, Garuda Constructions, which was launched in 2012.
Some of its current construction projects include residential, commercial buildings and miscellaneous construction projects at various stages of development. It is currently involved in the development of Amritsar Project, Punjab, Halaipani Hydropower Plant, Arunachal Pradesh, Food Park at Jalore in Rajasthan, an entertainment centre at Nagpur etc.
In addition, it is also setting up a Cold Storage Project near Indore in Madhya Pradesh and a Wellness Centre and Resort at Chiplun in coastal Maharashtra.
5) PKH Ventures Ltd has a track record of 20 years in the hospitality and management business and about 10 years in the construction business with a track book of marque projects already developed.
They have shown consistency and efficiency in delivery in the past and have good management bandwidth to handle growth. Of course, too much dependence on the construction business does make the business model fairly cyclical.
6) The promoter of PKH Ventures Ltd, Pravin Kumar Agarwal holds 63.69% stake in the company, which will be substantially diluted through this IPO. The company is also considering a pre-IPO placement of up to 25,00,000 equity shares ahead of the IPO.
If the pre-IPO placement is successful, then the size of the IPO will be reduced proportionately. The pre-IPO placement is distinct from the anchor placement that happens just before the IPO opening.
7) The IPO of PKH Ventures Ltd will be lead managed by Monarch Networth Capital Ltd. They will act as the sole book running lead managers or BRLMs to the issue.
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