QIPS to help the Infrastructure companies to reduce debt
Qualified institutional placement(QIP) entrails selling equity instruments to institutional investors. This route is now taken by many companies to raise funds primarily to repay debts and solve the liquidity crunch for the stalled projects. Two infrastructure companies, GMR Infrastructure and JP Associates, hit the capital markets on Wednesday to raise a total of $550 million (around Rs 3,300 crore) through the qualified institutional placement (QIP) route.Both the issues were primarily intended to repay debt.
In the last one month, two financial service providers and two mobile services companies have managed to raise Rs 11,142 crore through the QIP route. There is a positive sentiment in the market and these companies wanted to leverage the renewed investor interest in India after the change of government in May.
The fund raising by GMR and JP also signals relief for the ailing infrastructure sector, as in the last two years the traditional sources of funding dried up.
Bangalore-headquartered GMR Infrastructure would raise up to $ 300 million through issue of warrants convertible into equal number of equity shares. The company has set a floor price of Rs 33.14 per share for the issue and would offer a discount of up to 5 % the term sheet of the offer.
JP Associates aims to raise up to $ 250 million through a share issue to qualified institutional buyers. It has set the floor price for the issue at Rs 73.96 and may offer up to 5 % discount to the floor price or premium to the market price as determined by their board.
Source- The Economic Times
GMR Infrastructure, GMR Infrastructure Ltd, GMR Infrastructure’s airport business, JP Associates, Qualified institutional placement
