According to domestic institutional investors, the debt-ridden Indian real estate bigwig Unitech Ltd intends raising Rs. 1,250 crore by way of a qualified institutional placement (QIP) of shares, for the repayment of part of its debt of more than Rs. 8,000 crore.
An unnamed company official said that the funds, likely to be raised by the end of this month, would help the company cut its debt by Rs 1,000 crore by June this year.
The planned earnings from QIP would in part go towards the repayment of Unitech’s April 19-due outstanding debt of Rs. 500-crore debt to mutual funds. However, the QIP may well result in a 10-15 percent stake dilution from the company’s present evaluation – with its present marketcap being Rs 6,824 crore.
Some institutional investors say that Unitech is already through with the presentations to investors like SBI, HDFC, and LIC. The planned QIP move by Unitech appears to have resulted from the company’s recently encouraging rally in the stock market – marking a 70 percent rise in the company’s stock since March 9.
Commenting on the Unitech decision regarding QIP and its repercussion, an investment banker said on the condition of anonymity: “With markets recovering from its lows, Unitech has started working on the QIP issue. The dilution could be as much as 1/6th of the market cap.”