Shares of Videocon surged 12 percent in early trade on Monday after it announced its fund raising plans via global depository receipts (GDR). Speaking about the GDR, which amounts to USD 45.216 million to be issued to LLIC, Venugopal Dhoot, chairman and managing director, Videocon, says the investment firm has been very bullish on the company and has hence been looking to shore up stake even further.
LLIC, a large US-based global investment company, will be increasing its stake in Videocon from Rs 300 crore to Rs 550 crore.
“We have given them stocks at a premium of Rs 20-25 than the current market price through the Global Depository Receipts (GDR) route as it is easy for investments,” adds Dhoot.
Videocon Industries Ltd has informed BSE, "the company has decided to issue 15,700,000 GDR amounting to USD 45.216 million representing 15,700,000 equity shares at a price of USD 2.88 per GDR, equivalent to approximately Rs 181.61 per equity share, to LLIC S.a.r.l., on a private placement basis."
Application will be made for the GDRs to be listed on the Luxembourg Stock Exchange.
Below is the verbatim transcript of Venugopal Dhoot’s interview with CNBC-TV18's Anuj Singhal and Ekta Batra.
Anuj: If you could tell us about this investor and I believe this is not the first time they have made investment into Videocon. If you could tell us the entire details about transaction?
A: LLC is very jubilant on Videocon’s future because we are in oil and consumer durable business also has been doing well. Prime Minister’s Make in India policy will help Videocon in future time to come because we have the real manufacturers who have been telling us that they want to invest around USD 100 million more in our company but we said that at the moment we can give only Rs 250 crore.
So, they are happy to have Rs 250 crore and regarding price we have told them that the price will be just Rs 20-25 more than the Friday’s closing price and which they have agreed. So, accordingly we will be giving them this new investment via GDR. It is good that Videocon has been getting a good response from international market and as you known Videocon’s other associate companies like Videocon D2H. D2H has become number one in India.
Anuj: So how much stake does LLIC now have because they previously also subscribed to some GDRs?
A: That calculation we have not made. Previously they have made around Rs 300 crore, this is Rs 250 crore. So, what should be the percent we have to calculate it, we have not gone by calculating the percent but we have gone by the value, really the interest this company is taking in us.
Ekta: Can you just give us more of a profile of this particular investor LLIC SARL? Can you give us a sense in terms of where they come from, what their business is, why they are so interested?
A: They are a big investment company in USA. They have huge billions of dollars of investment across the globe and that is why they want to invest and we are happy that such a good investor is coming to us on a long term basis. It is a great opportunity for the company and for both the companies.
Ekta: Why have they adopted the GDR route and the reason I ask is that in May 2012 also, if I am not mistaken you all had raised funds via GDR? So this is not the first time. You tend to adopt the GDR route more often than not.
A: Yes, GDR is very easy to invest and now with the Government of India liberal policy to give GDR etc it has been very easy to get a foreign partner or foreign investor and that is why they have preferred a route of GDR and our board and the AGM also agreed for that and it is a good opportunity.
Ekta: And how much more would LLIC like to invest in the company and via what route if you could give us some sense? You did say that they were willing to invest around USD 100 million.
A: Yes, for future investment also they will be making like this only. GDR is the only method by which they can invest in the company and become our long term partner.
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