Mundra IPO on course: Bankers

The Rs 1,500-crore initial public offering by Mundra Port and Special Economic Zone (MPSEZ) is going ahead as planned, said bankers and top company officials, clearing apprehensions that the two-year ban on the seven entities promoted by Adanis from accessing the capital markets may jeopardise the IPO.

The Sebi order, issued on Monday, restrained seven Adani group entities Adani Agro, Adani Impex, Crown International, Shahi Property Developers, Adani Properties, Advance Exports and Intercontinental India from accessing the securities market for the company's alleged involvement with the rogue trader Ketan Parekh in share price manipulation back in 1999.

Crown International holds a nominal stake in MPSEZ raising doubts that the company may not be able to hit the IPO market, but bankers and company officials said that this would not come in the way of the public issue.

A company spokesman said: "Prima facie, the restriction applies to seven entities only. Neither Adani Enterprises and its subsidiary nor MPSEZ are affected from pursuing their financial mobilisation programme."

The company has also sought legal opinion from its lawyers on the Sebi order. "They (the lawyers) have said that they will get back to us in a day or two with respect to the Sebi order," the spokesman said.

A banker involved with the MPSEZ public issue said: "Since the order is specifically against the seven entities, we don't think it will impact the Mundra Port IPO as all the details regarding the promoters of MPSEZ is disclosed in the sale documents."

"Crown International against whom Sebi has passed the order holds .01 per cent in MPSEZ. Technically, we don't see any problem because of this. However, we are awaiting Sebi's observations," another banker handling the issue said.

MPSEZ will be the first company from the port sector and SEZ to tap the domestic capital market. The company plans to offer 40.25 million equity shares of Rs10 each to the public, which constitutes 10 per cent of the fully diluted post issue paid-up capital of the company.

A top company official said: "We are very keen on the IPO and will not look at any private equity or hedge fund investments. We have not received any formal communication from the Sebi regarding our MPSEZL IPO till date."

However, sources at MPSEZL said the company would approach the Securities Appellate Tribunal (SAT) against the Sebi order. In its investigation, Sebi said it found "KP entities" had indulged in manipulative activities to influence the price of the Adani scrip.

There was movement of shares as well as funds between the Adani group and KP entities. Further, there was a close association between 11 KP entities and Adani group's 14 entities.

The total cargo volume at Mundra Port increased by 36.4 per cent, from 8.6 million tonnes in 2005 to 11.7 million tonnes in 2006, according to the preliminary sale documents filed with the Sebi on March 7, 2007.

For the six months ended September 30, 2006, MPSEZL's income from operations stood at Rs 232.74 crore. The company recorded net profit of Rs 126.11 crore for the same period.