Lanco Infratech raises $150 million with QIP

Indian construction and energy conglomerate Lanco Infratech raised Rs7.2 billion ($150 million) via a qualified institutional placement (QIP) early on Friday morning. The deal topped off another busy month for the Indian equity markets, which have witnessed sustained demand from investors for new paper.

The deal started on Thursday night looking for $100 million, but there was sufficient demand to upsize by another $50 million. The 18.4 million shares were offered at a fixed price of Rs394.90 a share, a 6.4% discount to the closing price on Thursday of Rs422.10. After a full day of trading on Friday, the stock was down by just 2.8% to Rs421.30.

Lanco's shares have more than doubled since the Indian market started to recover in mid-April, but most of the upward momentum came in mid-May when the Congress Party won a second election, setting the markets on fire.

As is the norm with Indian equity deals, there were a plethora of bookrunners: Credit Suisse, J.P Morgan, Goldman Sachs, ICICI Securities, IDFC-SSKI, and UBS.

The company has interests in construction, power, infrastructure and property development. The construction division builds power plants, irrigation systems, commercial and residential buildings, and transportation systems. Its power division has two large gas power stations, as well as a hydro power plant and two wind farms. It currently has 10 more power projects that are being implemented.

Lanco launched the deal a day after it announced favourable results for the second quarter. In the three months to the end of June, its gross revenues were up 141% year-on-year to Rs22.3 billion from Rs9.2 billion. Operating revenue was also up by 140% to Rs21 billion in the same period.

Significant developments in the quarter include: the divestment of two subsidiaries -- Rithwik and Clarion Power plant -- to make a Rs146 million profit; starting to trade electricity on the Indian energy exchange; and buying a 9% stake in Lanco Amarkantak Power from a German institutional investor.

The Lanco QIP was the last placement to occur in July, a month in which nine deals were completed in India, raising a total of $1.15 billion. Compare this to June, which had five deals raising $925 million. July's largest deal was a $350 million follow-on completed by property developer Housing Development and Infrastructure.

The next stage for the Indian market is IPOs. On Friday, Adani Power closed the books on its $625 million IPO, with pricing details expected to come out today. If Adani's listing is a success, attention will likely shift from QIPs to IPOs, as there are several Indian power companies that have deals in the pipeline.