There was nothing exceptional about the performance of India's Sensex benchmark index yesterday -- it closed up only 0.14% -- but that didn't stop five companies from launching qualified institutional placements (QIPs). Together, the deals could raise as much as $1.15 billion.
One source said the success of Unitech's $575 million placement on Friday gave other companies a window of opportunity to launch their own deals. "Big deals beget more deals," as one source put it.
Given the outcome of the Unitech deal -- the property developer set out to raise $275 million, only to upsize by another $300 million due to strong demand - it should come as no surprise that four of the five placements last night were in the related fields of development, infrastructure and construction. And one source said that even though there were so many deals in the market, there was still enough investor demand for everyone.
Hindustan Construction Company (HCC), a company engaged in large engineering and construction projects in India and overseas, raised Rs4.8 billion ($100 million) for a combination of debt repayment, potential acquisitions and working capital.
A total of 47 million new HCC shares were offered at a fixed price of Rs102.15, a 4.7% discount to yesterday's close of Rs106.90. The stock is already up 110% year-to-date but investors were still interested in buying. The deal was multiple times covered by more than 30 investors and the order book was described as a mix of both long-only and hedge funds. Demand predominantly came from Asia and Indian domestic demand was strong. Morgan Stanley was the sole bookrunner on the deal.
Morgan Stanley, this time together with Enam Securities, also arranged a deal for Sobha Developers, an Indian real estate developer which initially aimed to raise $100 million via the placement of 23 million new shares. The deal was eventually upsized to 24.7 million shares, bringing the final deal size to Rs5.17 billion ($107 million). The shares were offered at a fixed price of Rs209.40, a 2.8% discount to yesterday's close of Rs215.40.
The largest deal launched last night was by GMR Infrastructure, which was tapping the market for up to $500 million. The company focuses on infrastructure with interests in airports, energy, highways and urban infrastructure. Among its many activities, it is currently developing an international airport in Hyderabad and also manages and develops Delhi Airport. The company is raising money to fund capital expenditure on building projects.
GMR went out with a fixed price of Rs142.25 a share, an 8.3% discount to the Rs155.15 at yesterday's close. The deal is being managed by a plethora of banks. The global bookrunners are J.P. Morgan, Morgan Stanley and UBS. They are joined by domestic banks Access Bank, Enam, India Securities, and Kotak. The deal is expected to price this morning.
The next largest deal is by Housing Development and Infrastructure, a real estate developer, which is expecting to raise $300 million. The deal is the only one of the five to go out with a range, set at Rs240 to Rs250 per share, which represents a discount of 5.7% to 9.5% versus yesterday's close of Rs265. The share price performed well in the last session, gaining 13.5%. The bookrunners on this deal were J.P. Morgan, Macquarie and Kotak.
The final deal was from Bajaj Hindusthan, an operator of sugar mills. The company was looking to raise Rs7.13 billion ($147 million) by selling 35 million shares at a price of Rs204 each, a 12.4% discount to the price at yesterday's close. CLSA and Deutsche Bank were behind the sale.
The Bajaj Hindusthan transaction follows a deal in the same sector last Friday when sugar cane processor Shree Renuka Sugars raised $105 million. The deal was priced at Rs137 a share, near the top of a price range between Rs135 and Rs138. The offering was more than three times covered at the top end, with more than 30 investors in the book. More than 70% of the investors were long-only funds, with demand originating evenly from Asia, Europe and India. DSP-Merrill Lynch was the sole bookrunner on this deal.