Marg to dilute stake in mall, education businesses

Chennai-based construction firm gets nod to raise Rs 500 crore through QIP

Chennai-based construction and infrastructure company Marg Ltd is planning to raise around Rs 500 crore through qualified institutional placements (QIPs), and is also planning to raise money from private equity investors for its mall, residential projects, education and other businesses.

The company today informed the Bombay Stock Exchange that its board has approved the plan to raise Rs 500 crore in one or more tranches through qualified QIPs.

GRK Reddy, chairman and managing director, Marg Ltd, said that the company is planning to dilute its stake in its Marg Junction Mall on the Old Mahabalipuram Road (OMR) in close proximity to the IT corridor.

As FDI in retail has now become a reality, there is scarcity for retail space and company's mall got interest some interest from investors. “We are planning to raise around Rs 200 crore through the dilution in the mall business”.

Opening in 2013 and spread over 1.83 million sq ft, the mall will be Chennai's largest 'mixed use' development consisting of a 5-star hotel by Shangri-La, according to Reddy.

Marg is also looking at raising around Rs 150-200 crore in real estate projects. “We have got approvals for the construction of two million sq ft -- largely residential, though a small portion is commercial -- in and around Chennai. The average sale price is around Rs 3,000-3,500 a sq ft.”

Overall, the company is looking at a sale value of around Rs 400 crore from these projects. “We are looking at raising around Rs 40-50 crore in each of the projects from private equity investors”.

The company is also looking at raising money by diluting stake in logistics and education businesses.

“While the dilution in the logistics businesses may happen in 12-15 months, we have appointed Deloitte and the consulting firm on how we can take it forward dilution in education business. We have a huge land bank which will attract the investors in this business”.

MARG is in the business of education an runs institues affilaiated to the Central Board of Secondary Education. It also runs management schools and other institutes under seven different titles.