GMR Infra calls off Rs 2k cr QIP

BANGALORE: GMR Infrastructure was on Tuesday forced to abandon its attempt to raise $500 million (Rs 2,000 crore) in off-market share sales to institutional investors after they showed little interest in the offering.
The failure of the Bangalore-headquartered company���s bid to raise money through qualified institutional placement (QIP) is seen as bad news for dozens of others who have lined up similar share offerings to raise around Rs 20,000 crore this year.

���We have decided to withdraw the QIP in light of the existing market conditions,��� GMR Infrastructure said in a statement to BSE. The company stock fell 8.79% to Rs 141.65 on BSE while the benchmark Sensex closed nearly 2% lower. GMR Infrastructure had set Rs 142 as the floor price for the QIP.

The company is part of the GMR Group, which operates the Hyderabad international airport and is the majority owner of the consortium that is operating and upgrading the Delhi international airport.

A person with knowledge of the company���s QIP process said there was investor appetite for only a fifth of the $500 million that GMR Infrastructure was looking to raise. ���We did not want to raise a smaller quantum as it will not meet our objective of raising growth capital,��� CFO A Subba Rao told ET. ���We will now time it appropriately,��� he added.

The QIP, which was meant to raise money in preparation for likely new infrastructure projects, was launched on Monday night.

���There is not that much investor appetite to absorb so much paper at one go,��� said an infrastructure expert with a consulting firm.

Furthermore, there is a sense of fatigue among investors, who no longer set much store by the India infrastructure growth story.

Property developers Unitech, DLF and Indiabulls Real Estate raised about Rs 8,000 crore through QIPs in April and May while Sobha Developers mopped up about Rs 500 crore this week.

But the spectacular failure of the GMR Infrastructure offering could cause others such as HDIL and Hindustan Construction to rethink their QIP plans. GMR Infrastructure officials say the company is now open to options such as raising private equity funds at the level of an intermediate holding company or through the special purpose entities implementing projects.

The company���s board had earlier this month approved raising up to Rs 5,000 crore through the QIP process, which would have brought down the promoter holding in the company by 10-11% from 74%. The company is allowed to raise the money within one year from the date of approval.

One of the concerns for investors may be that GMR Infrastructure has not used the $1 billion it raised through a QIP in December 2007. Also, there are no concrete plans for how the money, which it will raise, will be used.