Infra.Market could be on a path to public markets through a possible reverse merger with Shalimar Paints, which has greenlit a Rs 10,440 crore share-swap deal involving Hella Infra Market, the parent company of Infra.Market. Shalimar Paints has endorsed a plan to acquire equity shares and compulsory convertible preference shares (CCPS) of Hella Infra Market, determined by the valuation of both businesses. If executed, Hella Infra Market may transform into an unlisted material subsidiary of Shalimar Paints.
The board has also expressed interest in the potential “unification” of the two companies when conditions are favourable, subject to the necessary lawful approvals. Although Shalimar has not outright termed this as a merger, the proposed structure could pave the way for Infra.Market’s venture into public markets via an existing listed entity.
Highlights
Details of the Proposed Transaction
In the outlined transaction, Shalimar Paints plans to issue as many as 41.7 crore equity shares at a price of Rs 85 each, totalling approximately Rs 3,545 crore. These shares will be allocated to 185 investors through a preferential issue and will be issued in a form other than cash. Additionally, Shalimar intends to issue up to 81.12 crore CCPS at the same price, valued at around Rs 6,895 crore. Like the equity shares, these CCPS will also be provided for consideration other than cash. Collectively, these two proposals are valued at around Rs 10,440 crore.
Notably, the Rs 10,440 crore figure does not represent a cash acquisition. Shalimar Paints is suggesting the issuance of its own equity shares and CCPS in exchange for the investment in Hella Infra Market. The final swap ratio will be determined based on the valuation reports from both entities.
The proposed allotment entails several investors linked with Infra.Market. Aaditya Sharda and Souvik Sengupta, publicly acknowledged as the co-founders of Infra.Market, are poised to be the largest beneficiaries of the CCPS, with Sharda set to receive nearly 29.64 crore CCPS, and Sengupta approximately 29.69 crore CCPS. Bizarro Advisory and Silverline Homes will also be amongst the primary beneficiaries.
On the equity side, Nithin Kamath, NKSquared, Ashish Kacholia, Silverline Homes, and Trifecta Venture Debt Fund II are set to receive shares, along with other investors. The proposal identifies 185 investors for the equity issuance.
Implications for Infra.Market
For Infra.Market, this proposed transaction might present an alternate approach to entering the stock market, rather than pursuing a conventional IPO. Shalimar Paints stated that the merger would combine its market presence and manufacturing capabilities with Infra.Market’s extensive reach across ready-mix concrete, aggregates, steel, tiles, and other building products.
Additional Capital Raise Plans
In conjunction with the proposed share swap, Shalimar Paints has also approved a strategy to raise up to Rs 1,000 crore through a qualified institutional placement (QIP). Unlike the Rs 10,440 crore share and CCPS issue, this QIP would represent a fresh capital augmentation. Shalimar indicated that this funding would facilitate growth and enhance the broader company’s access to public markets.
The transaction remains in the proposal stage and is contingent on approvals from shareholders and regulatory entities. The ultimate valuation, swap ratio, and ownership structure will be finalised subsequently.
If realised, this merger could dramatically alter Shalimar Paints’ positioning, potentially establishing the listed paint company as a more comprehensive building materials platform featuring Infra.Market as a significant component. In a statement, Shalimar Paints articulated that the partnership would integrate their established market presence and manufacturing abilities with Infra.Market’s extensive scale in the building materials sector, potentially ushering Infra.Market into the public arena through Shalimar, thus forming a larger building materials entity.