Kalpataru Projects International Ltd. moves to reshape its capital structure

KPTS is expected to receive gross proceeds of approximately SEK 711.45 million if the full over-allotment option is exercised. This comprises 15,466,413 shares sold at SEK 46 per share: 13,319,670 shares in the base offering and up to 2,146,743 additional shares under the greenshoe option. On the base offering alone, gross proceeds would be approximately SEK 612.70 million. The disclosed amount is before customary adjustments, issue expenses and set-offs. ^[1]

Capital allocation: the company disclosure does not provide a firm management-approved split between consolidated debt repayment and reinvestment in KPIL’s core EPC operations. The transaction is framed as providing flexibility for either debt reduction or future growth initiatives within the KPIL group, rather than as a committed allocation exclusively to deleveraging or EPC reinvestment. ^[2]

The key structural point is that KPTS is selling part of its holding, not exiting LMG: its stake is expected to decline from 96.12% to 65.93% after full exercise of the over-allotment option. LMG therefore remains within the KPIL group, preserving the group’s operating exposure to the Swedish EPC business. ^[1]

Analytical reading: the proceeds could support consolidated deleveraging, but the evidence does not establish that debt reduction is the primary or exclusive use. Nor is there a disclosed commitment to recycle the funds into KPIL’s core EPC business. Any claim of a specific debt-reduction-versus-reinvestment proportion would therefore be unsupported.

KPIL’s residual indirect stake in LMG will be 65.93%, held through its subsidiary Kalpataru Power Transmission Sweden AB (KPTS), assuming full subscription and complete exercise of the over-allotment/green-shoe option. KPTS is disclosed to fall from 49,240,500 shares, or 96.12%, to 33,774,087 shares, or 65.93%, after the transaction. ^[1]

That should be sufficient for KPIL to retain control and continue consolidating LMG under Ind AS 110 and IFRS 10, since a holding of more than 50% of voting rights ordinarily provides the power to direct the relevant activities of the investee. The conclusion is on an indirect-control basis: KPIL controls KPTS, and KPTS retains the majority stake in LMG.

The qualification is that consolidation is not determined by ownership percentage alone. KPIL would still need to retain substantive voting power and control over relevant activities, with no shareholder agreement, special voting rights, board rights, or other contractual arrangements that transfer decision-making power to other investors. No such contrary arrangement is identified in the cited IPO disclosure.

If the green-shoe option is only partly exercised or not exercised, KPTS’s residual percentage would be higher than 65.93%; 65.93% is the full-over-allotment case. ^[3]

LMG is being priced at roughly 9.6x FY26 adjusted EBITA and 0.73x FY26 sales on an equity-value basis. That is not directly comparable with KPIL’s current core-EPC trading multiple because KPIL’s core EPC business is not separately listed and the cited material does not provide a current KPIL market capitalisation or a segment-level core-EPC EBITDA/EBIT denominator.

Valuation comparison

LMG’s proposed valuation was approximately SEK 2,350 million. Against FY26 net sales of SEK 3,225.2 million and adjusted EBITA of SEK 244.7 million, the implied multiples are:

• Equity value / sales: approximately 0.73x
• Equity value / adjusted EBITA: approximately 9.6x
• Adjusted EBITA margin: 7.6%

These are derived from the announced valuation and FY26 financials ^[4]. Because the numerator is an equity valuation rather than enterprise value, the 9.6x figure should not be labelled EV/EBITA unless LMG’s net debt is known. LMG’s final offering terms were set at SEK 46 per share, with up to 32.1% of the shares offered ^[1].

Accordingly, the appropriate conclusion is not that LMG is at a premium or discount to KPIL’s core EPC multiple, but that the comparison remains incomplete. A proper comparison would require KPIL’s current equity or enterprise value and the earnings attributable specifically to its core EPC operations. Consolidated KPIL multiples would also include businesses outside LMG.

Why list LMG separately?

The company’s stated rationale is strategic and market-facing rather than a loss of control:

• Local Nordic visibility: the Nasdaq Stockholm listing is intended to improve LMG’s visibility, credibility and brand recognition with customers, partners and employees ^[5].
• Support for Nordic expansion: management described the listing as supporting LMG’s ambition to strengthen its position as a leading Nordic power-infrastructure EPC provider ^[6].
• Broader shareholder base and transparency: the listing is intended to diversify ownership, increase transparency and create a platform for long-term value creation ^[6].
• Partial monetisation while retaining control: KPTS is selling shares but is expected to retain 65.93% of LMG after full subscription and exercise of the over-allotment option, down from 96.12%; expected gross proceeds to KPTS are approximately SEK 711.45 million ^[1].

Implication: KPIL is not presenting the IPO as a complete separation of LMG. It is using a European operating-market listing to give LMG its own public identity, investor base and valuation reference point, while retaining majority ownership and economic participation in future growth. The disclosed rationale supports greater visibility, transparency and strategic flexibility; it does not, on the cited evidence, establish a quantified valuation arbitrage versus KPIL’s core EPC business.