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Business News/ Companies / GMR revives energy unit IPO, plans to raise $250 mn via QIP
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GMR revives energy unit IPO, plans to raise $250 mn via QIP

The QIP proceeds are likely to be used to repay debt as the group hopes to tap the rising stock markets

As of 31 March, GMR’s debt stood at `33,599.28 crore. Photo: MintPremium
As of 31 March, GMR’s debt stood at `33,599.28 crore. Photo: Mint

Mumbai: GMR Group has revived plans to sell shares of GMR Energy Ltd, less than two months after scrapping a proposed initial share sale, and its parent GMR Infrastructure Ltd is looking to raise $250 million (around 1,500 crore) through a qualified institutional placement (QIP) as demand for stocks soar, said three people familiar with the development.

The Bangalore-based GMR Infrastructure will begin meeting institutional investors from Monday for the QIP, and is planning to file the draft prospectus for GMR Energy with the capital markets regulator by the end of June, the people said, asking not to be identified.

GMR Group is hoping to sell shares at a time when demand for such assets has soared among investors, who are expecting the new Narendra Modi-led government to spur investments and accelerate economic growth. Modi has promised to rein in prices, quicken clearances, create jobs and revive growth after taking over as Prime Minister last month. BSE’s benchmark Sensex has gained 5.9% since Modi’s Bharatiya Janata Party and its allies secured the biggest election victory in 30 years. Local companies are expected to sell shares worth at least $5 billion to institutional investors in the next two months, Mint reported 9 June.

GMR Group “realized some time back that it has leveraged too much and since then, it has been trying to sell some of its assets, restructure its capital structure and bring down debt", said Raveendra Chittoor, an assistant professor of strategy at the Indian School of Business in Hyderabad. “Given the significant re-rating of all infrastructure stocks over the last couple of months, this is probably a great window of opportunity to execute GMR’s restructuring plans."

On 28 April, GMR Infrastructure had told stock exchanges that it had withdrawn plans to take its energy arm public, citing “business reasons".

“The IPO was withdrawn because of some disclosures that were sought by Sebi. The firm was not sure then if the requested documents and disclosures could be made immediately," a banker familiar with the development said, adding that the documentation work has started once again given the strong market conditions.

He did not give details about the disclosures sought by Sebi.

The second person, cited above, said the company also wanted to change some clauses, which has “now been done".

“GMR Infrastructure, the holding company of GMR Group, will be raising money to de-leverage its balance sheet and the proceeds from QIP will entirely be used to repay debt," the person said. As of 31 March, GMR’s debt stood at 33,599.28 crore.

The roadshows for the QIP will be conducted in Hong Kong, Singapore, London and the US and the sale will open towards the end of June, he said. ICICI Securities Ltd, Deutsche Bank India, Bank of America Merrill Lynch and Axis Capital Ltd will manage the QIP, the first person said.

A GMR spokesperson declined to comment on the group’s fund-raising plan.

GMR Group has sold 74% stake each in two highway projects for nearly 500 crore, 70% in an energy project for $600 million and 40% in an airport project for 1,659 crore to cut its debt. GMR Infrastructure reported a 1,184 crore net profit for the quarter ended 31 March compared to a loss of 414 crore in the preceding three months, mainly because of the proceeds from a stake sale in its airport business.

On 30 May, GMR Group’s chief financial officer Madhu Terdal said the company will now focus on raising equity, cutting GMR’s dependence on asset sales. “Now that the markets have started turning, there will be more emphasis on raising equity," Terdal said.

malvika.j@livemint.com

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Published: 16 Jun 2014, 12:18 AM IST
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