HDIL’s follow-on QIP likely to open today

Housing Development and Infrastructure Ltd (HDIL) is set to open its follow-on qualified institutional placement (QIP) books either today or tomorrow, sources said.

“They want to open the books. That’s what big funds have informed us, but the point is if they receive poor response they might not do it. If they still take it, that would show their desperation to raise money,” an analyst with an international brokerage said.

The company, however, denied such a move.

“Three QIPs have happened this week. Thus people might think we are also in line. But nothing is happening,” Hari Prakash Pandey, vice-president - finance, HDIL, said.

Sources said HDIL was testing the waters on Tuesday, but received a poor response.

The share price could be a reason.

The HDIL stock closed Wednesday at Rs 308.95 per share. However, as per Sebi rules, the QIP floor price would have to be fixed at around Rs 340 per share. Under the rules, the share price would be either the six-month average or the last two week’s average, whichever is higher. The six-month average works out to Rs 340; the last two week’s average is at Rs 307 per share.

DNA had first reported on January 22 that HDIL was looking to raise close to Rs 1,200 crore through a QIP, with a floor price of Rs 370 per share. Company officials had left for Singapore and then to Hong Kong for road shows in the last week of January.

The senior management recently returned from its road show in the US and the QIP was expected in another week’s time.
Enam securities, J P Morgan, Kotak securities and CLSA have the mandate for the QIP.

At an earnings conference call on Wednesday, Pandey said the company needed about Rs 1,400-1,500 crore to acquire land for its Mumbai Airport project, to ramp up commercial projects in Kurla and Andheri suburbs and as seed capital for its rental housing project in Virar, where construction would begin in three years.

HDIL had earlier taken board approval for raising $600 million, of which it raised $360 million. Later, it took approval for raising $450 million more, which means it can now raise up to $690 million without having to take further approval.

Meanwhile, the company has informed the bourses that it raised Rs 55 crore in the fourth tranche of its drive to raise Rs 1,150 crore through non-convertible debentures (NCDs).

Surprisingly, it never notified the exchanges about the third tranche. Going by the notifications, it raised Rs 400 crore on December 29 last year, Rs 425 crore on January 20 this year and Rs 55 crore on March 4, totalling Rs 880 crore. That’s Rs 270 crore short of the mark.

Analysts, too, say it is not clear if the company has been able to raise the amount though it did want to close the NCD drive by March.

But Pandey said, “We have closed the entire fund raising of NCD of close to 1,200 crore.”