Afcons to repay SBI loan instead of Shapoorji Finance
ECONOMY & POLICY

Afcons to repay SBI loan instead of Shapoorji Finance

Shapoorji Pallonji group’s flagship construction firm Afcons Infrastructure, has dropped its plans to use part of its IPO proceeds to repay a loan taken from a related party - Shapoorji Pallonji Finance - which is categorised as part of the promoter group of Afcons. The change came after the company received observations on its draft red herring prospectus from markets regulator Securities and Exchange Board of India (SEBI) and the stock exchanges.

In the case of Afcons, SEBI raised concerns about the appropriateness of using IPO proceeds to repay a loan to SPCPL. Faced with SEBI’s concerns, Afcons made a strategic decision to drop its plan – a move that can be seen as a proactive measure to ensure compliance with regulatory expectations and to maintain investor confidence ahead of its IPO. By retracting the loan repayment plan, Afcons is signalling its commitment to transparency and responsible corporate governance.

As part of plans outlined in the draft red herring prospectus filed on 28 March, Afcons had proposed that it will use fresh proceeds of the IPO to repay a Rs 1 billion financing facility led by Central Bank of India along with Shapoorji Pallonji Finance in a co-lending arrangement where the Central Bank of India has a 75 percent share and Shapoorji Pallonji Finance has a 25 percent share. The loan was taken in July 2023 for working capital requirements and for payment to vendors and carries an interest rate of 10.95 percent. Out of the total fresh proceeds of Rs 12.5 billion proposed to be raised from the IPO, the biggest chunk of Rs 5 billion was reserved for repayment of certain loans availed of by Afcons. Apart from its promoter group company, other lenders that are proposed to be repaid from the IPO proceeds include State Bank of India, DBS Bank and HSBC. Following the SEBI observations, the Rs 1 billion earlier earmarked for Shapoorji Pallonji Finance loan has now been reallocated towards repayment of loans of similar amount from State Bank of India.

The flagship infrastructure engineering and construction company of the Shapoorji Pallonji group has, over the last 10 years, completed 76 projects across 15 countries with a total historic executed contract value of Rs 522.2 billion. As of 30 September 2023, Afcons, which is known for its expertise in executing complex projects across various domains, including marine, highways, bridges, tunnels, and metros, has 67 active projects across 13 countries, aggregating to an order book of Rs 348.88 billion. Some of the major projects executed by Afcons include the Chenab Bridge in Jammu and Kashmir, Atal tunnel in Himachal Pradesh and the Mahatma Gandhi Setu bridge in Bihar.

Shapoorji Pallonji group’s flagship construction firm Afcons Infrastructure, has dropped its plans to use part of its IPO proceeds to repay a loan taken from a related party - Shapoorji Pallonji Finance - which is categorised as part of the promoter group of Afcons. The change came after the company received observations on its draft red herring prospectus from markets regulator Securities and Exchange Board of India (SEBI) and the stock exchanges. In the case of Afcons, SEBI raised concerns about the appropriateness of using IPO proceeds to repay a loan to SPCPL. Faced with SEBI’s concerns, Afcons made a strategic decision to drop its plan – a move that can be seen as a proactive measure to ensure compliance with regulatory expectations and to maintain investor confidence ahead of its IPO. By retracting the loan repayment plan, Afcons is signalling its commitment to transparency and responsible corporate governance. As part of plans outlined in the draft red herring prospectus filed on 28 March, Afcons had proposed that it will use fresh proceeds of the IPO to repay a Rs 1 billion financing facility led by Central Bank of India along with Shapoorji Pallonji Finance in a co-lending arrangement where the Central Bank of India has a 75 percent share and Shapoorji Pallonji Finance has a 25 percent share. The loan was taken in July 2023 for working capital requirements and for payment to vendors and carries an interest rate of 10.95 percent. Out of the total fresh proceeds of Rs 12.5 billion proposed to be raised from the IPO, the biggest chunk of Rs 5 billion was reserved for repayment of certain loans availed of by Afcons. Apart from its promoter group company, other lenders that are proposed to be repaid from the IPO proceeds include State Bank of India, DBS Bank and HSBC. Following the SEBI observations, the Rs 1 billion earlier earmarked for Shapoorji Pallonji Finance loan has now been reallocated towards repayment of loans of similar amount from State Bank of India. The flagship infrastructure engineering and construction company of the Shapoorji Pallonji group has, over the last 10 years, completed 76 projects across 15 countries with a total historic executed contract value of Rs 522.2 billion. As of 30 September 2023, Afcons, which is known for its expertise in executing complex projects across various domains, including marine, highways, bridges, tunnels, and metros, has 67 active projects across 13 countries, aggregating to an order book of Rs 348.88 billion. Some of the major projects executed by Afcons include the Chenab Bridge in Jammu and Kashmir, Atal tunnel in Himachal Pradesh and the Mahatma Gandhi Setu bridge in Bihar.

Next Story
Infrastructure Transport

Metro Line 2B Phase 1 to Boost Realty in Mumbai’s Eastern Suburbs

Mumbai’s real estate sector is set for a major boost as Phase 1 of Metro Line 2B, between Mandale and Diamond Garden, nears completion. The Mumbai Metropolitan Region Development Authority (MMRDA) has confirmed that mandatory rectifications are done, and inspections by the Commissioner of Metro Railway Safety (CMRS) have been carried out. The 5.39-km stretch with five stations forms part of the larger DN Nagar–Mandale corridor, designed to ease congestion and improve east–west connectivity. Passenger operations are expected by December 2025, with the full line slated for 2027. ..

Next Story
Resources

WattPower wins Best Inverter award at Global Solar Expo 2025

WattPower, a leading renewable energy solutions provider, has won the award for “Best Inverter in the Utility Segment” at the Global Solar Expo 2025. The recognition underscores the company’s commitment to delivering reliable, high-performance and future-ready solar solutions for large-scale projects. At the forefront of utility-scale solar, WattPower manufactures advanced string inverters that directly feed power into the Indian grid. With robust technology, high-quality components and comprehensive product lifecycle support, its solutions stand among the most sophisticated in the ..

Next Story
Real Estate

Awfis delivers 67,000 sq. ft. innovation hub for eBay in Bengaluru

Awfis Space Solutions, India’s largest flexible workspace provider and the first publicly listed workspace solutions platform, has partnered with eBay to establish a 67,000 sq. ft. innovation hub at Embassy Tech Village, Bengaluru. The mandate covers design, build and management of the new office, which will act as a strategic hub supporting diverse functions and accelerating eBay’s AI-first commerce strategy. The centre will focus on artificial intelligence, engineering, product development and applied research, strengthening eBay’s growth in India. Embassy Tech Village, North Beng..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?