Infrastructure focused Sadbhav to merge it’s listed EPC and BOT businesses

Mumbai: Infrastructure focused Sadbhav group is merging its two listed entities Sadbhav Engineering Ltd, the flagship EPC services business and its listed subsidiary Sadbhav Infrastructure Projects Ltd, which builds and owns roads, ending the latter's short four year stint as an independently listed company.

Sadbhav Infrastructure went public in September 2015, selling its shares at ₹103 apiece to investors in ₹425 crore initial public offering. Shares of Sadbhav Infrastructure closed at ₹44.2 apiece, down 1.12% on the BSE, while shares of Sadbhav Engineering closed at ₹138.85, up 0.54%. Sadbhav Infrastructure's market capitalization stood at ₹1,556 crore as on Friday, while Sadbhav Engineering had a market capitalization of ₹2,382 crore.

According to a filing on late Saturday evening, Sadbhav Engineering told exchanges that shareholders of Sadbhav Infrastructure will get one share each in Sadbhav Engineering for three shares that they hold in the subsidiary company.

In August, the board of Sadbhav Infrastructure had given an in-principle approval to consider a merger with its parent and to appoint intermediaries to advise in the same.

The proposed merger aims to create a simplified corporate structure and better utilization of resources of the two group companies.

"The amalgamation will enable consolidation of the businesses into one combined entity - facilitating simplified corporate structure, productive utilization of combined resources, operational and administrative efficiencies, economies of scale, reduction in overheads &

other expenses, reduced inter-company transactions and reduction in the multiplicity of legal and regulatory compliances," Sadbhav said in its exchange filings.

The group also feels that the merger will significantly enhance the competitive position of Sadbhav Engineering as the combined entity will have expanded business pre-qualifications, increased networth to enable bid for larger and more complex infrastructure projects, improved credit rating due to better combined financial position, and better access to funds for growth opportunities, the group said.

"Further amalgamation will result in direct shareholding by all the shareholders in the combined business leading to larger and diversified shareholder base, better trading

and liquidity position in the equity shares, relatively higher market capitalization," it added.

The proposed merger follows Sadbhav Infraprojects deal to sell nine road assets owned by it to the L&T and CPPIB owned infrastructure investment trust for around ₹6,610 crore in July.