Hindalco's rights offer to sail through

Kumar Mangalam Birla-promoted Hindalco Industries’ rights offer is likely to sail through as the issue has received commitment from merchant bankers and financial institutions. The global depository receipt (GDR) entitlement has also been fully subscribed.

According to investment banking sources, domestic institutions would be subscribing to their entitlement, which would be around 17 per cent, while the promoters have already decided to buy 50 per cent of the total rights issue. Besides, the merchant bankers have underwritten the issue to the extent of 40 per cent.

Subscription to GDR entitlement of the rights offer was more than 99 per cent as it received subscriptions for 56.03 million shares against 56.42 million shares which were on offer, the bankers said.

Hindalco has come out with 525,802,403 equity shares at a price of Rs 96. At this price, the issue size works out to Rs 5,047.7 crore.

The issue opened on September 22 and would close on October 10. Lead managers to the issue include DSP Merrill Lynch, Citigroup Global Markets, Deutsche Equities and SBI Capital Markets.

Meanwhile, CLSA Asia-Pacific Markets, in a note released recently, has said there is a high likelihood of Hindalco successfully refinancing the Novelis acquisition bridge debt.

Besides, its rights issue has also been underwritten by promoters and investment banks. Also, the global aluminium outlook looks positive on the back of continued demand growth and supply curtailments.

Shares of the company closed at Rs 98.55, up 0.87 per cent, on the Bombay Stock Exchange.