Indiabulls Real Estate rallies over 25% on plans of preferential issue to promoters

The stock surged 27% to Rs 53.40 on the BSE in early morning trade.

Shares of Indiabulls Real Estate have surged 27% to Rs 53.40 on the BSE in afternoon trades after the company said its promoters will buy 10% stake in the property development company for Rs 538 crore.

“The board of directors of the company, at its meeting held June 20, 2015, has approved the preferential offer and issue of up to 36.7 million equity shares of Rs 2 each and up to 43.6 million warrants, convertible into equivalent number of equity shares of Rs 2 each to the promoter group entities at an issue/conversion price of Rs 67 per share, which is at a premium of above 59% on Friday’s closing market price of Rs 42.05 at BSE,” Indiabulls Real Estate said in a BSE filing.

"The total equity investments by the promoters would amount to Rs. 538 crore in the Company, post conversion of warrants," it added.

The company said, the move is part of effort for augmenting "the long-term resources of the company for meeting funding requirements for its business purposes," and also reflects the confidence that the promoters have in the future of the company. The shareholders' approval for the proposal would be sought during the meeting on July 20.

The trading volumes on the counter jumped over five-fold with a combined 42.78 million shares changed hands on the counter on the BSE and NSE till 1320 hours.