Housing Development and Infrastructure Ltd has shelved its follow-on qualified institutional placement (QIP) after receiving tepid response from investors.
“Yes we don’t want to do it in this volatile market. It has been put on hold,” a senior company official told DNA, requesting not to be named.
The company was looking to raise Rs 1,200 crore through the placement and had given Enam Securities, JP Morgan, Kotak Securities and CLSAAsia-Pacific Markets the mandate.
However, at Rs 340 per share, the floor price set was way too high for investors, particularly considering the stock has ruled closer to Rs 300 over the past week or so.
DNA was the first to report on January 22 that HDIL planned to raise around Rs 1,200 crore through an institutional placement.
An analyst from a Mumbai-based brokerage, which had received the sales mandate, said, “It (the QIP) is not happening as of now because investor appetite is just not there. The average price was coming to Rs 340 per share at which they didn’t want to enter; at Rs 307 per share there was still some chance of finding buyers.”
The QIP floor price was fixed at Rs 340 per share in accordance with the Securities and Exchange Board of India rule that it must be the higher of the average price in the last six months or in the last two weeks. The six-month average prevailed, weighing in at Rs 340 as compared with Rs 307 in the last two weeks.
HDIL, however, has raised Rs 1,150 crore through non-convertible debentures of 5-year tenure.
Meantime, the realty index has fallen 12.57% since the beginning of this calendar as compared to a 0.14% gain on the BSE Sensex.
In the last 12 trading sessions this month, the realty index has gained 4.15% as compared with 6.46% for the Sensex.
In view of the volatility in the market, realtors are even chary of opening their proposed initial public offerings.
Lodha Group and Emaar-MGF, which have already received Sebi approvals for their issues, are yet to hit the market.
On the other hand, Nitesh Estates, Prestige Group, Kumar Urban Infrastructure Ltd, BPTP and Sahara Prime City have filed draft red herring prospectuses and are awaiting Sebi approval. Going by a banker handling most of these issues, under the current circumstances, it is unlikely any of them will hit the market in the next six months.
“The valuations are far higher than the actual demand in the market. In commercial and retail segments, there is no recovery at all. The developers are de-leveraging gradually, but the stock prices are at the higher end. Unless these guys leave something on the table for the investor, HNIs and retail investors would not come in,” said Param Desai, research analyst at Angel Broking.
“HDIL tried its level best to raise the money. Now they will try again after a month or so, once things improve. They have been able to raise debt, but clearly no one is looking at equity at such high valuations. Even DB Realty had pulled off its IPO with much difficulty. Investors are not interested in realty as of now,” said another analyst from a different domestic brokerage.
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