Monday, December 6, 2010

A2Z Maintenance IPO - Analysis, Recommendation, Review

A2Z Maintenance and Engineering Services, an engineering, procurement and construction (EPC) service provider has come out with an initial public offering (IPO) comprising fresh issue of Rs 675 crore by the company and an offer for sale of upto 4,556,193 equity shares of Rs 10 each at the issue price. Upto 1 lakh equity shares will be reserved for subscription by employees, who will get shares at a 5% discount to the issue price. The company has been providing services to the power transmission and distribution sector with a focus primarily on the distribution.

The IPO will open on December 8 and will close on December 10, 2010. The company has fixed a price band at Rs 400-410 per share .

Proceeds of the issue will be used for investment in three biomass (bagasse)-based power cogeneration projects of 15 MW each in the State of Punjab; investment in five biomass-based power generation projects of 15 MW each in the State of Rajasthan; investment in subsidiaries; repayment of a loan granted by L&T Infrastructure Finance Company Limited (L&T Infrastructure Finance) to the company; and working capital requirements.

IDFC Capital Limited, DSP Merrill Lynch Limited, Enam Securities Private Limited, ICICI Securities Limited and SBI Capital Markets Limited are book running lead managers to the issue. Yes Bank is co-book running lead manager.

Recommendation:
We would recommend investors to stay away from this IPO.

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