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Gammon initial offering to fund India's 66-MW Rangit 2

Construction firm Gammon India Ltd. plans an initial public offering (IPO) of its Gammon Infrastructure Projects Ltd. unit to raise up to 3.31 billion rupees (US$82.2 million) for investments including the 66-MW Rangit 2 hydroelectric project in India's Sikkim State.

The price band for the 16.55 million-share March offering was set at 167 to 200 rupees (US$4.14 to US$4.96) a share, the company said. The book-built offer, through a fresh issue of shares, will constitute 11.5 percent of the post-issue equity capital.

Gammon India owns 82.5 percent in the unit, while private equity fund AMIF holds another 12.5 percent stake.

Gammon Infrastructure plans to use part of the proceeds for investment required by its wholly owned Sikkim Hydro Power Ventures Ltd. (SHPVL), for developing Rangit 2 on the Rimbi Khola, a tributary of the Rathong River in Sikkim. Proceeds also will be used for a bridge and highways in India and for general corporate purposes.

SHPVL is developing Rangit 2 on a build-own-operate-transfer basis under a 35-year concession from the Sikkim State government. The run-of-river project is to feature two 33-MW turbine-generators.

SVS Engineering Services Private Ltd. has completed a seven-volume detailed project report on Rangit 2. SHPVL is in the process of financial closure on the project, Gammon said.

Gammon Infrastructure holds 13 projects for developing roads, bridges, ports, power plants, and a special economic zone. Of those, four projects are operational and another five are under development. The company posted net profit of 321.3 million rupees (US$7.97 million) for the year ended March 2007, on total income of 1.59 billion rupees (US$39.4 million).

SSKI Corporate Finance and Macquarie India are the book-running lead managers to the issue.

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