Parsvnath Developers, the New Delhi-based real estate developer, is looking to mop up about Rs 2,500 crore through issuing securities and by qualified institutional placement (QIP) of shares.
The company would use the funds raised to retire part of its outstanding debt and invest in hospitality and special economic zones (SEZ) projects.
“With the funds raised and from cash flow of existing projects, we would be able to reduce our debt from the existing Rs 1,600 crore to Rs 600-700 crore by end of this fiscal,” Pradeep Jain, chairman, Parsvnath told DNA.
Parsvnath on Monday said in an announcement to the Bombay Stock Exchange that its board has decided to raise funds by issuance of further securities to new equity investors and also by QIP to raise funds up to Rs 2,500 crore.
The company is expecting to get shareholder nod by June and expects to raise funds in the first tranche, “primarily through the QIP route by June-July”.
The company would also use the funds to invest in its hospitality projects and six of its SEZs. The company would also raise funds in its SEZ projects by diluting stake through special purpose vehicles to private equity investors.
“I know commercial market is not doing well, but these 6 SEZ’s are small, and we have already paid for the land. So as it will take time for the construction, we expect market to get better,” Jain added.
He added that Parsvnath’s retail foray is still on hold and currently they would like to concentrate on residential, hospitality and SEZs.
Cash-crunched developers are increasingly finding it easier to raise funds through QIP. Last week, Unitech, India’s second largest real estate developer, raised Rs 1,600 crore from foreign investors.
Indiabulls Real Estate had raised Rs 2,656.50 crore through QIP, while HDIL said it would raise funds by way of QIP.
Market sources said that realtors such as Sobha Developers and Omaxe are also looking at QIPs.
Since early 2008, developers were finding it difficult to raise debt from banks and other institutions due to acute liquidity crunch in the global markets, leading to a virtual freeze in any new projects and indefinite delays in the existing constructions.
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