In an interview to CNBC-TV18, Irfan Razack, chairman and managing director of Prestige Estates said the appetite for IPP was good both from the domestic fund and foreign institutional investors (FIIs). The subscription was almost 2.75 times, he added.
The appetite for IPP was quite good. We had an offering of 19.98 crore shares and the subscription was for 54 crore shares. The subscription was approximately 2.75 times.
In an interview to CNBC-TV18, Irfan Razack, chairman and managing director of Prestige Estates said the appetite for Institutional Placement Programme (IPP) was good both from the domestic funds and foreign institutional investors (FIIs). The subscription was almost 2.75 times, he added.
Diluting the stake from 80 percent to 75 percent was basically to comply with Securities and Exchange Board of India (SEBI) guidelines, he explained.
He further added the company had enough cash and they were not interested in tapping the demand to raise more cash.
Below is the edited transcript of his interview on CNBC-TV18
Q: What was the appetite for the IPP; did you see a lot of oversubscription?
A: I am happy to inform that we are going ahead with the Securities and Exchange Board of India (SEBI) guidelines to dilute to 75 percent. We were probably the first real estate company or the first company in south India that took this step and now we have diluted our stake from 80 percent to 75 percent.
The appetite for IPP was quite good. We had an offering of 19.98 crore shares and the subscription was for 54 crore shares. The subscription was approximately 2.75 times, which is a good.
Q: Were you not tempted to tap this demand and raise more than you setout to?
A: The idea is that there is enough cash in the company and basically it was just to go ahead and comply with the SEBI guidelines.
Q: Can you take us through the key buyers of your issue? Who were the top five allottees?
A: I am prevented from talking about who the investors were as per Sebi guidelines. There is a blackout period of about ten days. After the allotment process is over we can talk about it more elaborately.
Q: Were they more foreign institutional investors (FIIs) or more domestic funds which got most of the issue?
A: It is a combination of both domestic funds and FIIs. The appetite was good. I think everything is to do with whatever we promised, we are delivering and we will continue to deliver. That is the key to capital raising or key to any business, and that’s our endeavour. In the future as we will keep delivering our promise to our investors and customers.
Q: What this fund is going to be used for? Is it going to payback some of your debt or is it going to be used for some new projects?
A: We do not have stress to repay any debt. Since this cash has come we will use it to strength business operations in cities that we operate in like Bangalore, Chennai and such cities.
Q: For commercial projects or hospitality projects?
A: It will be a mixed bag; probably some of it can even be used for increasing our rental yielding assets also. So, it is a combination. It basically gives the additional funding; additional cash into the system, which makes you, grow stronger.
Q: You have got quite a bit of capex coming up over the next few months. I am told to the tune of Rs 1,600-1,700 crore. Do you see any strain in cash flows or this additional cash that you have got into equity to tide it over without straining cash flows too significantly?
A: I think we have a sufficient pipeline of cash flow within the company including surpluses. Wherever the capex projects are there, we have already tied up funding for it. I do not see any strain because there is a proper structured planning on how the cash flows will come for the capex projects.
There is enough cash flow within the system to take care of our requirements. The last few quarters have been quite good. Our board meeting has not yet happened, so I cannot talk about how we have performed. Maybe we can do an interview as soon as our results are declared, so that we can talk more about it.
Q: A word on the Bangalore market and how it is holding up?
A: Bangalore has been doing extremely well. There is good momentum and demand. The supply is still coming in. Good projects with good locations and priced sensibly are doing well. Wherever the prices are too high, there is a lower traction. However, for projects where the developers are good and the pricing is right, the developers are succeeding in selling and selling very well. There is quite a lot of excitement happening here on ground in Bangalore.
Prestige Estate stock price
On September 18, 2014, Prestige Estates Projects closed at Rs 238.05, up Rs 4.45, or 1.90 percent. The 52-week high of the share was Rs 270.00 and the 52-week low was Rs 113.00.
The company's trailing 12-month (TTM) EPS was at Rs 9.53 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 24.98. The latest book value of the company is Rs 79.90 per share. At current value, the price-to-book value of the company is 2.98.
READ MORE ON Prestige Estates, institutional Placement Programme (IPP), domestic funds, foreign institutional investors (FIIs), Securities and Exchange Board of India (SEBI)
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