Mumbai-based DB Realty will likely raise up to Rs 1,500 crore through a qualified institutional placement at Rs 258 per share (with face value of Rs 10), sources told CNBC-TV18 on March 8.
The channel reported that the company plans to use QIP proceeds for business development and loan repayment. While the stock hardly has any institutional shareholders, the late Rakesh Jhunjunwala’s family owns a 4.98% stake in the company.
Base size of the QIP will likely be Rs 1,000 crore with a greenshoe option to raise an additional Rs 500 crore. Total equity dilution will likely be 10.4%.
The indicative price of Rs 258 per share represents an 8.5 percent discount from the current market price of DB Realty's stock at Rs 282. The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will remain closed on March 8 on account of Mahashivratri.
On March 7, in a stock exchange filing, DB Realty said its Board approved the floor price of Rs 270.87 for the QIP and that the Board will meet on or after March 13 to approve the issue price.
"We wish to inform you that a meeting of the Board/ Committee is scheduled to be held on or after Wednesday, March 13, 2024, inter alia, to consider and approve the Issue price, including a discount if any thereto, as permitted under the SEBI ICDR Regulations," said DB Realty.
Moneycontrol reported last month, citing sources, that the real estate developer has hired investment banks JM Financial and DAM Capital for the fundraising.
Last month, DB Realty said its board has in-principally approved a proposal to demerge the company's hospitality business as part of its efforts to unlock the value for shareholders.
In a regulatory filing, the company informed that the Board of Directors has considered and in-principally approved the proposal to demerge its hospitality business consisting of hotel business and assets.
The assets include Goan Hotels & Realty Pvt Ltd (a wholly owned subsidiary), BD and P Hotels (India) Pvt Ltd (a subsidiary), and Bamboo Hotel And Global Centre (Delhi) Pvt Ltd (an associate of the company).
D B Realty is one of the leading real estate firms in the country. It is mainly present in Mumbai Metropolitan Region (MMR).
A successful fundraising could mark a turnaround for the company, once a prominent real estate developer in the Mumbai market. DB Realty’s troubles started when its promoters, Shahid Balwa and Vinod Goenka, were named as accused in the 2G spectrum allocation scam. They were later acquitted by a special CBI court in December 2017 due to a lack of substantial evidence. However, their prolonged legal battle resulted in delays in projects and lenders turning away.
The company issued warrants in 2022 to Jhunjunwala and other investors, including promoters, to raise funds. With the full conversion of these warrants into equity shares in 2023, the company raised a total of Rs 1,544 crore, which was utilised to reduce its debt.
For the nine months ended December 31, DB Realty reported a consolidated net profit of Rs 1,330 crore from a loss of Rs77 crore in the year earlier.
Standalone secured debt stood at zero, the company said in a statement announcing the December quarter results with consolidated secured project-related debt at approximately Rs 1,900 crore.
In FY24, the company sold its stake in two joint ventures with Bengaluru-based developer Prestige Estates Projects. Prestige bought DB’s stake in the two joint ventures for Rs 1,176.5 crore.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
