Unitech Ltd, the country’s second-largest real estate developer, said it has received board approval to raise Rs 5,000 crore by selling shares to institutional investors.

On Thursday, under the same approval, the developer had raised $325 million through a qualified institutional placement (QIP) of 42 crore shares to Nomura, HSBC, Helios, Prudential, Sandstone, Sansar, Sloan Robinson, Och Ziff, Oasis and CLSA etc.

The New Delhi-based developer has been looking to raise money by selling stake and pay off its outstanding debt.

“We believe the money raised will be utilised to repay short-term debt, which was at Rs 10,000 crore as on December 2008. This will lower the company’s interest cost and reduce its debt-equity ratio to 1.2x from 2.2x. The QIP will also allow for easy funding of projects and act as a sentimental boost to the company given the pedigree of the institutional buyers,” Suman Memani, an analyst with Religare, said in a note to clients.

However, sources said Unitech would be able to generate enough cash flow to pay off its debt for the current fiscal with a combination of equity infusion, asset sale and ongoing business. It has about Rs 8,900 crore of total outstanding debt on its balance sheet.