GMR Infrastructure, JP Associates to raise $550 million via QIP

MUMBAI: Two infrastructure companies, GMR Infrastructure and JP Associates, hit the capital markets on Wednesday to raise a total of $550 million (around Rs 3,300 crore) through the qualified institutional placement (QIP) route which entrails selling equity instruments to institutional investors. Both issues were primarily intended to repay debt.
In the last one month, two financial service providers and two mobile services companies have mopped up Rs 11,142 crore through the QIP route to leverage renewed investor interest in India after the change of government in May.The fund raising by GMR and JP also signals relief for the beleaguered infrastructure sector which has seen traditional sources of funding drying up in the last two years.
As reported by ET on June 25, Bangalore-headquartered GMR Infrastructure would raise up to $ 300 million through issue of warrants convertible into equal number of equity shares. The company has set a floor price of Rs 33.14 per share for the issue and would offer a discount of up to 5%, the term sheet of the offer, which ET has seen, stated. Shares in GMR have gained over 50% in the last three months to end at Rs 33.85 on BSE on Wednesday.
"The proceeds of the QIP offering and the preferential allotment will be used primarily for the purpose of strengthening our financial position and net worth by way of repayment of borrowings, capital expenditure, working capital and general corporate purposed and meeting exigencies," GMR said.
JP Associates aims, for its part, to raise up to $ 250 million through a share issue to qualified institutional buyers. It has set the floor price for the issue at Rs 73.96 and may offer up to 5% discount to the floor price or premium to the market price as determined by the board. The company is selling shares in the indicative price band of Rs 70.27 to Rs 74 a share, according to the term sheet sent to potential investors.
Both JP Associates and GMR have accumulated considerable debt and have been trying to sell stake in projects and subsidies to de-leverage their balance sheet. GMR has accumulated consolidated debt of Rs 39,187.45 crore (as on March-end), and the QIP proceeds would help the company lower its debt. JP Associates' debt was around Rs 28,000 crore as on March-end and the QIP is a part of the move to cut the debt.