July 1 (Bloomberg) -- Housing Development & Infrastructure Ltd.’s $350.3 million sale of shares to institutional investors capped the best quarter in six for Indian companies raising funds from such offerings.
It may also mark the peak of investor appetite for so- called qualified institutional placements as fund managers balk at prices. GMR Infrastructure Ltd. scrapped a $500 million sale yesterday after cutting the amount sought by 80 percent. At least 40 companies led by JSW Steel Ltd. have said they plan to raise more than a combined 350 billion rupees ($7.3 billion) after Indian stocks had their biggest quarterly gain in 17 years.
“There is not enough money available for everything and at any price,” said Vetri Subramaniam, head of equity funds at Religare Asset Management Co., who oversees $158 million in assets in Mumbai. “You need to give value to get people to put in money.”
Developers Indiabulls Real Estate Ltd. and Unitech Ltd. led Indian companies in raising 55 billion rupees from Qualified Institutional Placements, or QIPs, during the second quarter, the most since a record 130 billion rupees was raised in the three months ended Dec. 31, 2007, according to Bloomberg data.
“QIP has become a mechanism to access the market quickly and efficiently,” Saurabh Agrawal, head of investment banking at DSP Merrill Lynch Ltd., said in an interview in Mumbai.
The securities regulator began allowing companies to sell shares through the QIP process in May 2006 following complaints that domestic stock sales took too long to complete, forcing companies to raise money overseas. The pricing formula for the QIPs was changed by the regulator in August 2008 to bring the sale price closer to the market value of the shares.
Pipeline of Deals
Parsvnath Developers Ltd., billionaire Anil Ambani’s Reliance Communications Ltd., Omaxe Ltd. and Ansal Properties & Infrastructure Ltd. are among the companies that have said they may raise funds from QIPs, according to filings made to the Bombay Stock Exchange during the quarter.
GMR, a builder of ports and roads, scrapped its proposed offering “in light of the existing market conditions.” It didn’t provide additional details in a statement to the Bombay Stock Exchange yesterday. The company had earlier cut the amount it was seeking to $100 million after failing to win enough investors for a larger sale, a person familiar with the matter said, declining to be identified.
“Somehow or the other, it was not happening today, so we have decided to call it off rather than dilute the value,” GMR spokesman Vijay Vancheswar said yesterday in an interview. “It is a question of time. We don’t need money desperately.”
Sensex Rally Crimped
India’s Sensitive Index fell 2 percent yesterday, paring the benchmark’s quarterly gain to 49 percent, on concern the proposed stock sales will sap demand for existing shares.
Still, investors bought $150 million of shares from Bajaj Hindusthan Ltd., India’s biggest sugar producer, this week, as well as $110 million from Sobha Developers Ltd. and $100 million from Hindustan Construction Co. The board of Hindalco Industries Ltd. yesterday approved plans to raise as much as $500 million by selling shares to institutional investors.
“There’s a lot of investor appetite,” said DSP’s Agrawal. “The market leaders would be able to go out and raise money,” ensuring success for about half the companies that have gotten approval to raise funds, he said.
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment