IPO screener: IRM Energy subscribed 1.72 times on Day 1

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The IPO of IRM Energy Limited, a city gas distribution (CGD) company, was subscribed 1.72 times at the end of Day 1 of the issue opening on Wednesday, after heavy bidding by retail and non-institution investors (NIIs).

The IPO will close on Friday (October 20). The company, which is in the business of laying, building, operating, and expanding the city or local natural gas distribution network, has fixed the price band at ₹480 to ₹505 a share for its initial public offer and plans to raise ₹545 crore through the issue.

Investors can bid for a minimum of 29 shares and in multiples of 29 shares thereafter. 

The public issue of the face value of ₹10 a share is entirely a fresh issue of up to 1.08 crore equity shares. The offer also includes a reservation for eligible employees, who can enjoy a discount of ₹48 a share.

While the retail investors’ portion was subscribed 1.79 times, the quota reserved for NIIs attracted bids for 2.6 times their portion. The portions reserved for QIBs and employees were subscribed 1.07 times and 0.38 times respectively.

The company intends to utilise about ₹307.26 crore for funding capital expenditure requirements for the development of the City Gas Distribution network in the Geographical Areas of Namakkal and Tiruchirappalli (Tamil Nadu) in the coming years, while ₹135 crore will be used for prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company, and general corporate purpose.

Anchor investors

As part of the IPO process, the company on Tuesday garnered ₹160.35 crore from anchor investors. The company informed the bourses that it allocated 31.75 lakh shares at ₹505 a share to foreign investors and domestic institutions.

Among the anchor investors were Quant MF, SBI General Insurance, HDFC Life, DSP MF, ITI MF, BOI MF, Nippon AIF, and PNB Metlife.

Operation details

The company has operations at Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu & Gir Somnath (Union Territory of Daman and Diu/Gujarat), and Namakkal & Tiruchirappalli (Tamil Nadu), serving 184 industrial customers, 269 commercial customers, 52,454 domestic customers, as at June 30, 2023.

IRMEL had an established a network of 69 CNG filling stations, comprising 2 CNG stations owned and operated by the company (COCO Stations), 36 CNG stations owned and operated by dealers (DODO stations), and 31 CNG stations owned and operated by oil marketing companies (OMC stations).

Tie-ups

To capitalise on synergetic business opportunities, it has entered into a strategic and technical partnership with Shizuoka Gas Co. Ltd, Japan. Besides, to achieve business integration, the company has invested in Farm Gas Private Limited, Venuka Polymers Private Limited, and Ni Hon Cylinders Private Limited. Additionally, it has signed a Memorandum of Understanding (MoU) with Mindra EV Private Limited for setting up an electric vehicle charging infrastructure at DODO Stations and COCO Stations for five years, with a vision of transitioning to an energy-oriented company.

HDFC Bank Limited and BOB Capital Markets Limited are the book running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.



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