GE Shipping cancels plan to issue shares of subsidiary

Great Eastern (GE) Shipping Company has withdrawn the draft red herring prospectus (DRHP) of its subsidiary, Greatship (India) Ltd (GIL).

“In light of the prevailing market conditions, GIL, in consultation with the book running lead managers, Kotak Mahindra Capital Company Ltd, DSP Merrill Lynch Ltd and Edelweiss Capital Ltd, has decided not to proceed with the issue, and hence have withdrawn the DRHP,” GE Shipping said in a filing to the Bombay Stock Exchange.

GIL had filed the DRHP with the Securities and Exchange Board of India on May 12, 2010.

Industry sources said the company was looking to raise $120-130 million through the initial public offer (IPO) and use the proceeds for expansion and debt payments. It had plans to offer a 20 per cent stake through the IPO.

An analyst tracking the shipping sector said GE Shipping had two rigs and 15 offshore vessels. “Out of the two rigs, one is owned by Great Eastern and the other one is chartered. The company was looking to buy this second rig for $170-180 million and hence, planned an IPO in its subsidiary,” said he. A company spokesperson said, “The IPO was for capex and other plans, and some part of it was for buying the rig. Other routes of fund raising are being evaluated now.”

GE Shipping has a capex commitment of $573 million. Of this, $260 million has been advanced to yards as stage payments.

GE Shipping on Friday reported 24 per cent increase in its consolidated net profit for the third quarter of the current fiscal at Rs 117 crore.