KEI Industries Ltd, a housing wire and cable maker, on Thursday said that its board has approved raising funds from institutional investors through a so-called qualified institutional placement (QIP) offering, the company said in a stock exchange filing.
QIP is a tool used by listed companies to sell shares, debentures, or any other security, other than warrants that are convertible into stocks, to qualified institutional buyers such as mutual funds and foreign institutions. Mint reported on 12 January that KEI Industries is looking to raise funds through a QIP offering.
The company is planning to raise up to ₹500 crore through the share sale, said a person aware of the company’s fundraising plans, on the condition of anonymity.
“They are targeting a base issue size of ₹400 crore, with an option to increase the deal size by another ₹100 crore, if there is strong demand," said the person cited above.
The company has set a floor price of ₹518.14 per share for the QIP offering, which opened on Thursday evening. KEI’s shares closed at Rs522.7 apiece on Thursday on the BSE.
On 17 December, the company informed the exchanges that its board had approved raising of funds in one or more tranches, by way of qualified institutional placements (QIPs) for an amount not more than ₹1,000 crore.
The investment banking arm of Edelweiss Financial Services Ltd is advising KEI Industries on the fundraise.
According to the share sale prospectus filed by the company with the stock exchanges, KEI will use the proceeds for repayment of debt as well as for capex purposes.
“Our company proposes to utilize the net proceeds for the purposes of pre-payment and / or repayment of our outstanding indebtedness (whether in whole or in part), funding the long term growth of our existing businesses and capital expenditure of our company, financing other long term capital, working capital, and general corporate requirements," the company said in the prospectus.
Founded in 1968 as a partnership firm under the name Krishna Electrical Industries, the company was converted into a public limited company in 1992 and was listed on the stock exchanges in 1995. The firm makes different types of cables, house wires and stainless-steel wires at its manufacturing facilities in Bhiwadi, Chopanki, Pathredi and Silvassa. It is also involved in engineering, procurement, construction (EPC) work in the power distribution space. Some of its key clients include Power Grid Corp. of India, Tata Power Ltd, NTPC Ltd, Larsen and Toubro Ltd, Suzlon Energy Ltd, Mahindra Solar, Hindalco Industries Ltd, Sweden’s ABB Group and Indian Railways.
As on 30 September, the company’s total debt stood at ₹670 crore, while its current capacities were operating at 83% utilization for cables division, 68% for housing wire and 89% for stainless steel wires, according to the investor presentation on its website.