New Delhi: Azad Engineering Ltd has received capital markets regulator Sebi’s go-ahead to raise Rs 740-crore through an initial public offering (IPO).

The Hyderabad-based firm, which filed its preliminary IPO papers in September, obtained the regulator’s observation letter on December 5, an update with the Securities and Exchange Board of India (Sebi) showed on Thursday.

In Sebi’s parlance, obtaining its observation letter means its go-ahead to float an IPO. According to the draft papers, the company’s IPO comprises a fresh issue of up to Rs 240 crore and an offer for sale (OFS) of equity shares aggregating up to Rs 500 crore by a promoter and investors. The OFS consists of sale of equity shares aggregating up to Rs 170 crore by promoter Rakesh Chopdar, Rs 280 crore by Piramal Structured Credit Opportunities Fund, and Rs 50 crore by DMI Finance.

Proceeds from the fresh issue will be used for funding capital expenditure of the company, payment of debt, and general corporate purposes. Azad Engineering supplies products to global original equipment manufacturers (OEMs) in the aerospace and defence, energy, and oil and gas industries.

The company’s customers include General Electric, Honeywell International Inc, Mitsubishi Heavy Industries, Siemens Energy, Eaton Aerospace, and MAN Energy Solutions SE.