Mumbai: Shapoorji Pallonji Group is in discussions with investment banks for a potential initial share sale of its solar engineering, procurement and construction (EPC) business, three people aware of the development said.
The Mumbai-based conglomerate is targeting a valuation of around $3.5-4 billion for the business which generates 80% of its revenue from overseas, said one of the three people cited above, requesting anonymity as he is not authorized to speak to reporters.
“They have met investment banks recently and they have held exploratory talks about a possible initial public offering of the solar EPC business," the person said. “The business has grown considerably in size over the last few years, especially on the back of overseas business."
Shapoorji’s solar EPC business is housed under Sterling and Wilson Pvt. Ltd.
Several EPC companies are tapping the capital markets to raise funds amid strong order inflows on higher infrastructure spending by the government.
In May, GR Infraprojects Ltd filed draft share sale papers for an initial share sale to raise about ₹ 1,800 crore. The same month, Ahmedabad-based construction company Montecarlo Ltd filed draft papers for a ₹ 550 crore IPO.
The improving outlook has also led construction companies to explore fund-raising opportunities.
Companies such as NCC Ltd, Gayatri Projects Ltd, ITD Cementation Ltd and MEP Infrastructure Developers Ltd have raised funds this calendar year through the qualified institutional placement (QIP) route.
A second person cited above, who also spoke on the condition of anonymity, said Shapoorji is also exploring raising funds from the private market for the solar EPC business.
A spokesperson for Sterling and Wilson denied the fund -raising plans for the solar EPC business in an emailed response to a Mint query.
Sterling and Wilson ventured into the solar EPC business in 2010.
The company has a global presence with installed capacity of more than 1,930 megawatts (MW) and 2,450 MW under-construction.
Sterling and Wilson recently won a contract to build a 1,177 megawatts solar project in Abu Dhabi, the largest such project in a single location globally.
In addition to India, Sterling and Wilson has implemented solar EPC projects in countries such as Egypt, Morocco, South Africa, the Philippines and Namibia.
Apart from the solar EPC business, the 90-year-old company is also involved in a variety of other EPC services. These include MEP (mechanical, electrical, and plumbing), co-generation solutions, transmission and distribution, turnkey data centres, diesel generators as well as operations and management services.
Sterling and Wilson operates in more than 25 countries with a strong presence in regions such as the Middle East, Africa, Europe, the Americas and Australia.
The company reported a revenue of ₹ 6,200 crore during the financial year 2016-17, according to its website.