GSPC plans 2nd pvt placement at less than Rs81/share

The state-owned Gujarat State Petroleum Corporation Ltd (GSPC) is likely to launch a second round of private placement of shares, while its Rs3,500-crore IPO is still on hold. Sources in the company said that the allotment of shares in this round will be restricted to the shareholders of the first round, and the price of the shares will be less than Rs81 per share.

“The company is still working out the details of how much to dilute in the second round, the time frame and the shares to be allotted to PSUs and to other corporate bodies,” a source in the company said. “But the second round could be as early as in July 2010.” It is understood that, in the second round of private placement, shares will be allotted to the same parties that were allotted shares in the first round. These include the SBI, IDBI Bank, the IFCI and other state PSUs.

Share prices in the second round are likely to be kept below Rs81 per share. The sources said that the company could fix Rs70 per share as the price for the second round. The company had raised Rs689 crore from the first round of private placement. In addition, the SBI had invested Rs300 crore in debentures, convertible at Rs81 per share.

The rationale for the second round of private placement of shares when the GSPC’s IPO is still on hold appears to be the company’s need to raise money for its ongoing exploration and other activities. The second round would also help it bring down the per share cost of its shareholders who were allotted shares at Rs81 per share in the first round.