Tata Steel raises Rs5.08 billion from anchor investors

Tata Steel has raised Rs5.08 billion ($111.8 million) from anchor investors at the upper end of an indicated price range ahead of a public share offering, reflecting investor optimism in the company's prospects in India's fast-expanding economy.  

Major investors include the Abu Dhabi Investment Authority, Government of Singapore, and investment units of Fidelity, Morgan Stanley, Credit Suisse, Macquarie and ICICI Prudential, exchange data showed.

The world's seventh-largest steelmaker issued 8.325 million shares, or nearly 15% of the total offer, at Rs610 each to 33 anchor investors, according to the data issued late on Tuesday.  

Tata Steel is in the market to raise a maximum of Rs34.77 billion ($770 million) by issuing 57 million shares, or 5.9% of equity, in the follow-on public offer at Rs594 to Rs610 each.

The public offer, comprising of 48.675 million shares, opens on Wednesday.   

The proceeds will be used to fund a 3-million-tonne capacity expansion at its Jamshedpur plant in eastern India, repay debt worth 10.9 billion rupees and invest in other projects.

Indian companies raised $24.9 billion from equity issues in 2010, up 22% from the previous year, ThomsonReuters data showed.

The fundraising has been bolstered by a firm stock market and surge in foreign inflows as overseas investors seek broader exposure to an economy growing at 8.5%.                                           

RBS, HSBC, SBI Capital, Citigroup, Deutsche Bank, Standard Chartered and Kotak Mahindra are the managers to the Tata Steel offering.    

At 0500 GMT, shares in Tata Steel, valued at $12.6 billion, were trading at 639 rupees, up 1%in a flat Mumbai market. The stock had risen about 10% in 2010, underperforming a 17.4% rise in the main index.