Pantaloon Retail plans to raise Rs1,000 crore by selling shares to investors through the qualified institutional placement (QIP) route.
This is the second time the Kishore Biyani-led Pantaloon is using the QIP route to raise money. The first time was three years ago, when the company raised Rs260cr by selling shares to institutions in 2006.
Though the company has not finalised the details yet on utilizing these funds, it plans to use it to bring down debt levels and grow the business.
On a standalone basis, the company’s total debt in FY2009 (Pantaloon’s financial year ends on 30 June) is estimated at around Rs3,200 crore and debt-to-equity ratio at 1.2:1. It is expected to go up to 1.4:1 by the end of FY2010.
The company is also talking to private equity investors, such as TPG and Bain Capital, to raise as much as Rs1,200 crore in the next 2-3 weeks. The company had also recently raised Rs368cr by issuing warrants and shares to promoters.
We maintain our NEUTRAL rating on the stock.