‘No show’ of GMR Infra offer exposes QIP risks

MUMBAI: The risky side of QIP issues was exposed on Tuesday. In a post-market release, GMR Infrastructure said that it was not going ahead with its planned QIP issue ������in light of the existing market conditions.'' Although the company did not explain, market players pointed out that a 9% fall in its stock price on Tuesday weighed heavily against pricing of GMR's QIP offering.
GMR had shareholder approval to rise up to Rs 5,000 crore through equity issuances.However, after several downward revisions since its June 9 approval, the company was finally pinning hopes on rising about Rs 2,400 crore through a QIP issue that was expected to close before the budget. Institutional dealers in the know of the QIP issue said there was several downward revision of the offer price in the past few weeks since merchant bankers were not able to build the book.
Institutional sources said on Monday GMR's QIP issue was pegged at $500 million, but was slashed drastically to just $100 million by early Tuesday, but eventually withdrawn due to lack of demand.
While it is only GMR that has withdrawn the QIP issues, others in line for similar fund raising plans were also hit in Tuesday's market. The stock price of HDIL, which is targeting to rise about Rs 1,450 crore, closed 12.2% off on BSE, while Bajaj Hindustan, which is aiming to raise Rs 1,500 crore, ended 11% lower.
TOI on Monday reported that there was a rush to raise funds through the QIP route which was making a section of the market players jittery. Plans to raise so much money in such a short duration could also affect the sentiment in the secondary market, fund managers and brokers said.