SriCity buys back early investor AMIF Holding as it shelves IPO

2020-03-02

Sri City, the integrated business park with an SEZ and a free-trade warehousing zone, has bought out one of its initial investors AMIF Holdings' 16.7 per cent stake, and is planning to spend Rs 200-crore for building pre-fabricated factories to help secure better revenue.

The buyout was carried out by the company and not other promoters, and was forced as it has delayed its IPO plans for the medium term, a top company official said.

The existing promoters include the founder and MD Ravindra Sanareddy, a few NRIs and a few PE funds, which the MD refused to name citing confidentiality.

"Last month we gave an exit option to AIMF Holdings, which has stayed with us since our beginning in 2008 and was planning to exit for some time. Since an IPO is not conducive now, we decided to buy back their 16.7 per cent stake in the holding company of the park," founder and managing director Ravindra Sanareddy told PTI on Monday.

On the IPO plans, he said they "do not see a share sale happening at least in the next one year" due to the bad market and poor revenue flow.

The park located near the Sriharikota space centre on the Andhra coast in Nellor district was founded by Sanareddy and has been operational since 2009. The sprawling 10,000-acre park is home to around 190 firms from 27 nationalities, and operates a multiproduct SEZ, a domestic tariff zone, a free trade & warehousing zone besides an electronics cluster.

Some of the leading MNCs include Foxconn that employs over 15,000 girls/women making it the largest in terms of jobs creation, Mondelez occupying over 1,079 acres, Pepsico, Kellogg's, Alstom, and the Japanese construction equipment major Kobelco, to name a few.

Last month, Chinese rail giant CRRC, which is the world's largest rolling stock manufacturer, signed up to manufacture 36 metro rail units comprising 216 coaches for the Bangalore metro.

Panasonic has also signed up to set up a manufacturing plant.

On the Rs 200-crore capex plan, Sanareddy said this is aimed at getting into an annuity model of rental income by supplying pre-fabricated plants or office space to the new companies entering the park.

"As we enter the second phase and second decade and to get the committed Rs 70,000 crore investments creating over 1 lakh jobs, we've lined up Rs 200 crore in capex over the next two years. We plan to use this capex to set up pre-fabricated factories apart from an 18-hole golf course," he said.

Sanareddy also said a share sale will happen only after securing a strong revenue stream and he expects offering prefabricated factory space on an annuity model may help steady revenue flows, which in FY19 stood at Rs 300 crore and was fully rental income.

Reference: Business Standard