Indiabulls to raise up to Rs 3k-cr through QIPs

Indiabulls to raise up to Rs 3k-cr through QIPs
The Financial Express, Corporates & Markets, May 19, 2009, Section II, Page 1

fe Bureau, Mumbai

The shareholders of Indiabulls Real Estate Ltd (IBREL) has approved raising up to Rs 3,000 crore ($600 million) through shares sale to qualified institutional buyers (QIPs), to fund its projects and acquire new businesses, the company informed BSE. With the issue opening on Monday, the allotment of the shares is expected to be made around May 22, the company’s draft prospectus showed. Morgan Stanley is the lead book manager to the issue.

When contacted, Indiabulls director Gagan Banga refused to divulge details about the purpose for raising funds through QIPs. Investment banking sources said the company was expected to use the QIPs proceeds to fund its power projects, mainly a 1,320-mw project planned in Amaravati in Maharashtra. The QIPs was expected to be a precursor to the initial public issue (IPO) being planned by the company, sources said.

QIPs is basically a primary market fund requirement which fuels either the growth or completes restructuring capital in the company. Last week, the founders of DLF, India’s largest listed developer, raised $783 million through a share sale in the firm. In April, New Delhi-based developer Unitech raised $325 million through a placement of shares with institutional investors.

IBREL scrip was one of the biggest gainers in on the Bombay Stock Exchange on Monday, going up by more than 38% to Rs 205. The benchmark Sensex rose by 2,100 points on Monday ahead of breaching the upper circuit, closing at 14,272 points.

In April, IBREL had said that the company’s board had approved a plan to raise $600 million through QIPs of securities. The company has posted a 98.34% dip in net profit at Rs 6.77 crore for the quarter ended December 31, 2008, as compared to Rs 410 crore recorded during the previous corresponding period. The company has reported a 93% dip in total income from Rs 535.72 crore during the quarter ended December 31, 2007 to Rs 37.44 crore during the quarter ended December 31, 2008.

Currently, a number of listed real estate companies are in the process of raising funds across India through QIPs. These include Delhi-based Ansal Group, Sobha Developers, Omaxe Ltd and Bangalore-based Puravankara Projects.

India’s realty players are facing a cash crunch as the cost of funding rose last year amidst the global credit squeeze, while inflated valuations kept home buyers on the sidelines. New projects have since been put on the backburner while many of those under construction are delayed.

Indiabulls group has interests in real estate, infrastructure, financial services, multiplex and power sectors. Indiabulls Group companies are listed in Indian and overseas financial markets. The net worth of the group exceeds $2 billion, according to the company’s website.