Shapoorji Pallonji Group’s first IPO looks to raise Rs 4,500 crore

Mumbai: The 150-years-old privately held conglomerate, Shapoorji Pallonji Group, is planning to make its first initial public offering with a Rs 4,500 crore issue of arm Sterling & Wilson Solar. The IPO may hit the capital market by the third quarter of FY20.

The $8.1 billion Shapoorji Pallonji Group, which has run most of its businesses privately, is exploring various ways to unlock value and deleverage balance sheet, as it faces rising cost pressures and sluggish sales volumes. The IPO of Sterling & Wilson Solar, the group’s solar power engineering, procurement and construction (EPC) business, could be the first on this front. The issue is an offer for sale by the company’s promoters and chairman, Khurshed Daruvala.

“Proceeds from the issue will be used by the promoters to capitalise the parent company, which can in turn repay the loans it has taken from Sterling & Wilson Solar, making it a zero-debt company. Getting listed will also help us in enhanced bank limits and better brand recognition,” Daruvala told ET.

The group is headed by Shapoor Mistry, who along with brother Cyrus Mistry owns a 18.6 per cent stake in the Tata Group’s holding company, Tata Sons. Solar EPC is a relatively new business for the Shapoorji Pallonji Group which has presence in engineering and construction, energy and infrastructure, real estate, textiles, financial services and water.

The group, which has to its credit some of the most landmark construction projects of India, entered into solar EPC in 2011. Riding on the push on solar energy across the world, the business grew and was demerged for listing. Two companies, Forbes & Co and Gokak Textiles, were already listed when the group bought those.

“Of our business, 75 per cent comes from international markets, while 25 per cent is from India; the share of international business will increase going ahead. We are present in 26 countries and would continue to expand overseas as it gives us better volumes and returns since we are a turnkey project executer abroad,” Daruvala said.

Sterling and Wilson has overtaken China-headquartered TBEA as the largest EPC provider globally, with a market share of 3 per cent, according to London-based global information provider IHS Markit. In 2018, the 30 largest EPC providers installed 19 gigawatts of non-residential photovoltaic solar power capacity, representing 21 per cent of the total market.

“We want to remain agnostic to technology; that gives us flexibility to grow. The next big growth would be battery-backed solar power project,” said Daruvala.

Sterling & Wilson Solar’s total order book stood at Rs 6,510.347 crore as of December 31, 2018

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