Godrej Properties will raise up to Rs.750 crore through a shares issue over the next 6-12 months to bring down promoters’ shareholding in the company from the current 83.79% to 75%, and to finance its ongoing as well as future projects.
According to the capital market regulator Securities and Exchange Board of India (SEBI) norms, shareholding of promoters of public listed companies need to be reduced to 75% by June 2013, and this is the driver for the proposed fund raising, Pirojsha Godrej, Executive Director of Godrej Properties, said.
The company would prefer a qualified institutional placement of shares or a follow-on issue, but the final call on the instrument is yet to be taken, he said.
The fund raising will also enable the company to part finance its ongoing and future projects including the joint development deal with Jet Airways for 2.5 acres in Bandra Kurla Complex in Mumbai.
Adi Godrej, Chairman of the Group, has already said that promoters would consider diluting the stake to comply with the SEBI norm as per the fund requirement of the realty company.
As part of the recent 2.5-acre BKC land development deal with Jet Airways, Godrej is required to pay Rs.135 crore to compensate Jet for expenses already incurred, and also acquire the Rs.360-crore debt of the aviation company on this property. Jet and Godrej will share the project’s profit equally.
“It’s (Jet BKC) a capital intensive project, we could use the some funds raised to part finance it. We will need additional capital to fund our growth. But we are not in a great rush to raise it anytime before six months,” said Pirojsha Godrej.
Currently, the company’s market capitalisation is around Rs.4,600 crore and 9% stake dilution can fetch up to Rs.500 crore, Godrej said. “We would like to wait and raise funds when markets are in better shape,” he said.
Late Friday, the company informed stock exchanges in a notice that the company will raise up to Rs.750 crore through equity issue, but did not mention any timeframe for this.
The funds raised will also be used to finance other projects of the company. In the quarter ended September, Godrej Properties entered into five business development deals spread over 8 million sq ft in Hyderabad, Nagpur, Thane, Bangalore and Bandra Kurla complex in Mumbai.
On Friday, the company announced entering into another pact with Universal Builders for developing around 4,00,000 sq ft of premium villas spread over 14.5 acres at Electronic City in Bangalore. Godrej Properties will receive 11% of the project’s revenue as development manager fees.
