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ShareNew Delhi: Foreign institutional investors picked up 96% of Unitech Ltd's qualified institutional placement which saw the realtor buying $575 million on Friday in a matter of hours.
Only 4% was picked up by domestic insurers and mutual funds.
Why did the issue fly despite the valuation headwinds buffeting the sector?
It's the quick returns made by investors in the first QIP in April. They had bought the shares at Rs 38.50 and their investment more than doubled to Rs 82 (the closing price of the Unitech share on Friday) in less than two months. Selling the issue, thus, was a breeze.
So when QIP books were opened at 3:30 PM on Friday, the company expected to garner only about $250-$300 million at Rs 81 per share. But in less than half an hour, the developer got commitments for $275 million.
The company decided to extend the QIP book till midnight, which led to eventually raising $575 million by 9.30 pm. For the second tranche, the developer had also conducted roadshows in the US. Halbis Capital Management, a unit of banking major HSBC, Texas Pacific Group, Prudential of the US, Nomura Securities, Farallon Capital Management, private equity player D E Shaw, hedge fund Sansar Capital, Sandstone Capital, Amiya Capital, Duquesne Capital, DWS, Mirae Asset were the large investors in QIP II.
A company belonging to legendary investor George Soros also invested, the second time it has done so in Unitech. The first QIP done by Unitech in April had seen 90% of the placement going to FIIs.
According to the sources familiar with the development, Unitech might use "about 30-35%" of the funds raised to pay off part of Rs 7,800 crore of debt on its books.
The developer would use remaining funds to aggressively expand its affordable housing portfolio through which it plans to sell over 20,000 homes this year under its Uni Homes brand. It has already launched 9 million sq ft, which is worth Rs 3,500 crore of projects between April and May and has been able to sell over 3,000 units.
