Godrej Consumer Products Ltd (GCPL), the fast moving consumer goods company, is planning to raise Rs 600-700 crore through qualified institutional placement (QIP) to fund acquisitions.
The QIP issue will result in an equity dilution of around six per cent, according to GCPL Chairman Adi Godrej.
He plans to launch the issue before the month-end.
GCPL shares closed 1.86 per cent up at Rs 333.35 today on the Bombay Stock Exchange (BSE). It hit an intra-day high of Rs 352.
GCPL has been on an acquisition spree. Its latest buy Argencos, a mid-size Argentinian hair care company, is the fifth in three months.
With sales of $12 million (Rs 56 crore), the deal size was estimated to be Rs 80-100 crore, said analysts.
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This is GCPL’s second acquisition in Latin America after the buyout of Issue Group on May 23.
GCPL’s other acquisitions include Tura in March, Indonesian major Megasari Makmur in April, Sara Lee’s 51 per cent stake in Indian joint venture Godrej Sara Lee in the second week of May.
Godrej had earlier told Business Standard that he was open to any route to raise equity. “It could either be a QIP or private equity investment or both,” he had said.
But the company now appears to be looking only at the QIP route only to raise equity.
The balance, out of the Rs 3,000 crore war chest set aside for acquisitions, is being raised via debt.
According to Godrej, both Latin American deals are being funded by offshore debt.
Much of the cash on the company’s books had been utilised to pay off some portion of the acquisitions, including Megasari and the 51 per cent Sara Lee stake, Godrej said.
It is clearly in need of funds, according to analysts, to close the transactions it has on hand.
“The norms for raising QIP are different from that of a PE investment. It is easier to raise money via a QIP rather than through a PE,” said an equity analyst on condition of anonymity.
“There is also no interference in day-to-day operations from the investor as is the case with a PE investment.”