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Real Estate Company Unitech Raises $ 575 Million via Private Placements
| June 27, 2009 |  (Be the first to rate this story!) Loading ... |
Real estate major Unitech raised $ 575 million (Rs 2,800 crore) on Friday through placing shares with overseas private equity funds at Rs 81 per share. This clearly indicates the rising interest of foreign investors in the Indian real estate market. The company had a plan to raise only $200 million but as the demand from investors was huge, it decided to increase the issue size. According to a source, the total demand in the auction was for over $1 billion.
In the deal, the company will issue 342 million shares, which will expand its equity base by around 16.7%. This will bring down the promoter’s stake in the company to around 43%. However, following the conversion of warrants, subscribed by the promoter in May at Rs 50 per share for Rs 1155 crore, his stake will increase to 49%. The company had raised $325 million in April by selling 421 million shares to private equity funds at Rs 38.50 per share. A senior company official said that this was the last dilution of capital base of the company. The money raised on Friday will be partly used to repay the high cost debt of and partly to launch affordable houses in various regions of the country. At present, the company has a loan of Rs 7,800 crore.
The share rice of Unitech on Friday closed flat at Rs 82.35. A senior merchant banker said that the current round of fund raising will help the company tide over slowdown in the real estate sector. Unitech had announced its plans to build 20,000 affordable houses at an investment of Rs 1,700 crore. It is also aiming to sell 15,000 flats in 2009-10. It is converting some of its premium projects into affordable housing. As there is huge demand in the affordable housing segment, construction of low cost houses will increase the cash flow of the company. Due to high interest rates and global financial crisis, the demand for houses had almost evaporated in the second half of 2008. As developers sifted their focus on the low cost housing, activities have again picked up.
News Published Under: Real Estate India, Real Estate Developers |
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