PE majors buy stake in Pipavav Shipyard

In a pre-initial public offering (IPO) deal, four global private equity majors together picked up 2.25 per cent stake in Pipavav Shipyard (PSL) for around Rs 105 crore.

The firms - Blackstone, Merrill Lynch, Deutsche Bank and Galleon Group - have picked up 13 million shares of the port and shipping company.

Global private equity major Blackstone picked up five million shares through its India Fund, Merrill Lynch four million, Deutsche Bank two million and Galleon Group two million shares of the company. The shares were all bought at Rs 80 each, which is close to the company's IPO price band, according to sources.

The total investments by made the PEs increases the total foreign institutional investor (FII) stake in PSL to 29 per cent. After this investment, the total institutional holding in company (foreign and domestic) stands at around 45 per cent.

PSL executives declined to comment when contacted. This follows a similar investment by Singapore-based Sembcorp Marine, an offshore oilrig builder and a technical partner of PSL. Sembcorp picked up over 17.5 million shares, a little over 3 per cent stake, in PSL.

In September 2007, New York Life, 2i Capital and Trikona bought stake worth $25 million each in the company.

Prior to that, companies like Amro Asia Merchant Bank (Singapore), Trinity Capital, IL&FS, Exim Bank, IDBI, UTI and Standard Chartered Infrastructure Fund had acquired stake in the company.

At present, PSL is developing a 651-metre-long dry dock about 130 km from Bhavnagar, which the company claims is the third largest in the world after Hyundai's yard in South Korea and Dubai Dry Docks.

SKIL Infrastructure and Punj Lloyd are the co-promoters of the company.

On January 19, PSL had filed a draft prospectus with the Securities and Exchange Board of India (SEBI) for an IPO of over 8.68 crore shares.

The company plans to use the IPO proceeds to part-finance a shipyard complex at Pipavav, to be set up at an estimated investment of Rs 2,888 crore.