Azad Engineering’s initial public offering (IPO) has a ₹500 crore offer for sale (OFS) component by promoters and external investors.

The IPO of Hyderabad-based Azad Engineering has commenced its subscription on Wednesday, with the ₹740 crore issue open for investors until Friday, December 22.

The price band for the IPO is set at ₹499-524, with the ₹500 crore OFS component facilitated by promoters and external investors. Rakesh Chopdar, the Chairman and Managing Director of the company, mentioned, “The remaining ₹240 crore will be raised through the fresh issue of shares.”

Chopdar further highlighted that external investors, including Piramal Structured Credit Opportunities Fund, are selling shares for ₹261 crore. The fund had initially invested ₹160 crore in August 2022.

The funds raised from the IPO are intended to partially finance the capital expenditure for the company’s ₹280 crore expansion, involving the setup of two units by the end of the next fiscal year. Additionally, a portion of the proceeds will be utilized for repaying/pre-paying debt amounting to approximately ₹90 crore.

Azad Engineering derives more than 80 percent of its revenue from exports to 15 global markets.

In the grey market, Azad Engineering’s shares are trading at a premium of ₹440. The grey market, an unofficial stock and applications market, allows investors to trade shares before official listing in the stock market.

The estimated listing price for Azad Engineering IPO is ₹964, significantly higher than the IPO price of ₹524.

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