IDFC arm eyes Raipur Alloys

MUMBAI: Not so long ago, it was a daunting task for even large steel and mining companies to raise funds. Now, even a relatively little known Raipur Alloys and Steel is attracting investors.
An arm of Infrastructure Development Finance Company (IDFC) and a well-known foreign investor are set to pick up to 20% stake in the integrated steel company.
Raipur Alloys is raising funds to meet its capital expenditure requirements of Rs 450 crore.The fund raising will be done through a preferential issue of equity shares which will also allow the promoters'- the Sarda family - stake to come down below 75%, from the current level of 83% as mandated by the regulatory guidelines.
The promoter stake went up primarily because of the merger of group companies Chattisgarh Electricity Company and Raipur Gasses with Raipur Alloys. With the issue of equity shares on a preferential basis to investors, the promoter's stake would also come down. According to Sebi rules, the public (non-promoter) shareholding in a company should be at 25% to remain listed on the bourses.
Only last week, Australian bank Macquaire, picked up a 5% stake in a bulk deal at Rs 189 per share. Raipur Alloy's share on Monday closed at Rs 203 on the Bombay Stock Exchange. "Steel is one of the hottest sectors for investment today, especially with domestic demand growth hovering around 10%. Any company with access to mines is something that financial investors will be keen to lap up, an industry expert said. Raipur Alloys mines iron ore and coal and also operates a sponge iron unit."