John Energy IPO to provide exit route for Rakesh Jhunjhunwala, other investors
Mumbai: Integrated oilfield services company John Energy Ltd, backed by India’s best known stock market investor Rakesh Jhunjhunwala, is looking to go public and will soon file its draft initial public offering (IPO) papers, said three people aware of the development.
Established in 1987, Ahmedabad-based John Energy provides skilled manpower and oilfield services such as drilling, and manufactures drilling rigs for onshore oil and gas exploration and production (E&P).
“John Energy is in advanced stages of preparation of its draft red herring prospectus and they are likely to file the DRHP with Securities and Exchange Board of India (Sebi) by end of January or early next month," said one of the three people cited above, requesting anonymity, as he is not authorized to speak with the media.
Investment banks IDFC Bank and Keynote Capitals Ltd are advising the company on its initial share sale, he added.
The IPO could see the company raise around Rs300 crore, through a mix of primary and secondary share sale, said the second person cited above, also requesting anonymity.
“The IPO will provide an exit route to several HNIs and other investors of the company such as Rakesh Jhunjunwala. The company will also raise a small amount of primary capital to fund business growth," he said.
As of 31 March 2017, Jhunjhunwala held a 18.21% stake in the company, data from the company’s filings with the registrar of companies (RoC) shows.
Jhunjhunwala had invested Rs50 crore in the company in 2007.
“We are contemplating a public offering for John Energy which may most likely be a combination of fresh issue and offer for sale; however, it is premature to comment on the timing, size or any other aspect of the issue. At the appropriate time, we shall be able to share relevant details," said Rakesh Choudhari, managing director at Keynote Capitals Ltd in an email response to Mint’s queries.
Emails sent to Jhunjhunwala did not elicit any response.
According to RoC data, in 2015-16, the company reported a consolidated revenue of Rs565.14 crore, compared to Rs514.45 crore the previous year.
In 2015-16, John Energy reported profit of Rs63 crore, against Rs48.9 crore the previous year. The latest financial numbers were not available with RoC.
According to the company’s website, it has drilled more than 630 wells, working in diverse geographic areas such as deserts, national parks and the Himalayas.
Apart from India, the company has completed projects in countries such as Kazakhstan, Algeria and Uganda. It is also focusing on entering the Gulf Cooperation Council market.
John Energy has a fleet of 30 drilling rigs and employs more than 1,400 people.
Over the years, few private equity firms have taken a bet on the Indian oil and gas sector.
Private equity firm Samara Capital invested Rs28 crore in Asian Oilfield Services Ltd, a reservoir imaging company, in 2007.
The fund later raised its stake to over 56% in two tranches, pumping in another Rs40 crore. In 2016, Samara exited its stake in Asian Oilfield Services.
In 2011, Multiples Private Equity had picked up a significant minority stake in Sara Sae Pvt. Ltd, which manufactures hi-tech drilling equipment for land and jack-up drilling rigs.
John Energy’s IPO plans to go public come at a time when the Indian IPO market has seen its best year ever.
In 2017, 36 companies raised Rs67,147 crore through the IPO route, while 26 companies raised Rs26,493.8 crore in 2016, data from primary market tracker Prime Database shows.