Mumbai: Construction company Montecarlo Ltd is restructuring its business as part of a plan to go public next year, two people aware of the development said.
The restructuring will see the company separate its real estate business and merge all other engineering, procurement and construction (EPC) services into the parent company to simplify its structure, said one of the two people cited above, requesting anonymity as he is not authorized to speak to reporters.
Montecarlo, founded in 1995, offers services across infrastructure projects such as highways, roads, irrigation, water supply, mining, power transmission and distribution, building and urban infrastructures.
“The idea of the restructuring exercise is to put all the real estate businesses into a separate entity and all the infra entities in the main company. This exercise will see the amalgamation of all the infra entities, which include Montecarlo Energy, Montecarlo Projects, Montecarlo Engineering and Montecarlo Infrastructure into Montecarlo Limited, the parent company," he said.
All the real estate-focused businesses will be transferred to two entities Montecarlo Realty Ltd and Montecarlo Construction Pvt. Ltd, which will be demerged from the parent company, he added.
The restructuring exercise will help the company raise funds for the two entities, especially through an initial public offering of the parent company, said the second person, who also requested anonymity. “The group has been contemplating to go public for a while. They are likely to look at an IPO sometime next year."
In an emailed response, the company confirmed the restructuring of its businesses.
“To segregate between core business being infrastructure development (highways, railways, water, mining, energy and building & factories) and non-core activities and thereby make Montecarlo Ltd (MCL) hold only the core business while the non-core business could be housed into SPVs /demerged entities," a company spokesperson said. “This brings focused attention of management, helps in strategizing, eliminates valuation discounting and also gives clarity to investor community while taking MCL public."
The restructuring exercise is expected to be completed by March, he added.
Montecarlo’s revenue rose to Rs1,640.25 crore in 2015-16 from Rs1,063.93 crore in the previous year, according to data from the company’s filings with the Registrar of Companies (RoC). Profit rose to Rs93.11 crore from Rs62.96 crore in the previous year, the RoC data showed.
A handful of infrastructure companies have already tapped the IPO market in the past two years.
In August, construction and road development company Dilip Buildcon Ltd raised Rs664 crore through its IPO, which was subscribed almost 21 times by investors.
In 2015, several infrastructure focused company’s such as Sadbhav Infrastructure Project Ltd, Power Mech Projects Ltd, PNC Infratech Ltd and MEP Infrastructure Developers Ltd raised capital from the primary market. Collectively, these four firms raised around Rs1,500 crore from their IPOs.
Other infrastructure companies are also looking to go public.
In September, Delhi-based GR Infraprojects Ltd filed documents with the regulator for an initial share sale that will see the company raise Rs240 crore. In December, PSP Projects Ltd filed its draft initial share sale prospectus.