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Mahanagar Gas joins IPO party; files draft papers with Sebi

Joining the IPO bandwagon, gas distribution company Mahanagar Gas Ltd (MGL) has filed draft papers with the capital markets regulator Sebi to raise funds through a public offer.

The Initial Public Offer (IPO) would be of up to 24,694,500 shares of Mahanagar Gas Limited, as per the Draft Red Herring Prospectus (DRHP) filed with Sebi.

This would include an offer for sale of up to 12,347,250 shares by state-run GAIL and of up to 12,347,250 shares by UK-based British Gas Asia Pacific Holdings Pte Ltd.

The offer would also include a reservation for eligible employees.

MGL distributes gas to 0.82 million households and over 2,600 small commercial and 55 industrial establishments. The company also supplies CNG to vehicles in Mumbai, Thane, Mira-Bhayander, Navi Mumbai and beyond.

GAIL and British Gas Asia each hold 49.75 per cent in the company. The Maharashtra government also has a minor 0.49 stake in the firm.

“The objects of the offer are to achieve the benefits of listing the equity shares on the stock exchanges and to carry out the offer for sale.

“We believe that the listing of the equity shares will enhance our brand name and provide liquidity to the existing shareholders,” the firm said in the draft paper.

Kotak Mahindra Capital and Citigroup have been appointed the merchant bankers for the IPO.

For the 2014-15 fiscal, the company had reported a profit of Rs. 301 crore.

The IPO market has seen a firm revival in the recent months, which Sebi Chairman U K Sinha yesterday attributed to the reforms undertaken by the regulator and to the improved investors’ sentiments towards the general economy.

“Two years back, people were of the view that Sebi is being stringent in clearing DRHPs. Three years back from that time, two-third IPOs were trading below issue price. It was a matter of worry. Sebi has started asking tough questions. We tried to put some responsibility on merchant bankers,” Sinha told reporters here.

“So far as procedure is concerned corporate India is comfortable the way Sebi is clearing the documents,” he added.

Sinha was speaking at the inauguration of Sebi’s pavilion at the India International Trade Fair here.

Further, he said that IPOs in an electronic format and ASBA (Applications Supported by Blocked Amount) facility will come into effect from January 1, 2016.

ASBA is a facility that allows the money to remain blocked in the applicant’s bank account till the shares are allotted, thereby eliminating delays related to refunds of unallocated shares.

These moves will reduce the time taken between the share sale and the listing, enhance the reach of retail investors in the share sale, and reduce costs.

The measures will further help in developing the market, while safeguarding the investors’ interest.

So far this year, 18 companies have launched their IPOs and have collectively raised about nearly Rs. 11,000 crore, making it the best period in four years in terms of fund raising through initial share-sale programmes.

In comparison, six IPOs had hit the market in the entire 2014 and together garnered just Rs. 1,261 crore, while three firms had launched their public issues in 2013 to mobilise Rs. 1,284 crore.

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