Unitech may issue a billion shares

Hopes to mop Rs 8,500 crore; promoters could raise stake by 5%.

Bolstered by the sharp run-up in its share price after the recent private placement, the country’s second-largest realty firm Unitech today took shareholders’ approval to issue up to a billion shares to raise more funds.

At the current market price of around Rs 87 a share, the company could bring in around Rs 8,500 crore through this route.

In addition, the company would raise Rs 1,150 crore through a preferential issue of convertible warrants to promoters at Rs 50 each. Each warrant is convertible into one equity share.

“The real estate market has bottomed out and investors are showing an interest in realty companies. Even though we do not need to raise funds immediately, we want to be ready as the market sentiment is very bullish,” said Sanjay Chandra, managing director, Unitech.

In April 2009, the company mobilised Rs 1,625 crore through issue of fresh shares to select foreign and domestic investors. Of the funds raised through QIP, Unitech used Rs 700 crore for repayment of a part of its debt, which is about Rs 7,800 crore.

“Our sale of assets in the past two months has fetched us more than the expected amount and we expect to mop over Rs 1,700 crore by the end of this fiscal, as against Rs 1,600 crore expected earlier,” Chandra added.

Till date, the company claims to have raised nearly Rs 1,000 crore through the sale of its two hotel properties and a commercial office space in Delhi NCR.

The company also got shareholders’ approval to issue 227.5 million convertible warrants on a preferential basis to promoters at Rs 50 for each. The promoter group will pay 25 per cent of the total amount in the next 15 days. On conversion of the warrants, the promoters’ stake in Unitech will go up by 5 per cent. It is 51 per cent currently.

On the listing of its real estate investment trust (REIT) on the Singapore Stock Exchange, Chandra said the market in Singapore was not good enough to get the desired money through public issue of its commercial assets.

“We were able to raise more money by selling our assets to high net worth individuals and will continue to do so this year. The listing of REIT would take another year,” said Chandra.

The company has booked over 4 million sq ft of residential space in the past two months and expects booking of around 20 million sq ft of space by the end of this fiscal year.