Kalpataru Power makes Rs 347 cr placements

Kalpataru Power Transmission has completed a qualified institutional placement (QIP) for an amount of Rs 347 crore ($75 million) at a price of Rs 727 per share, a premium of 2.7 per cent to the three-month average price of the stock.

At this price, the placement would mean a dilution of 18 per cent on the post-issue capital of Rs 26.5 crore.

This is the second such placement to institutions after the new rules were announced by SEBI in May, 2006. A couple of weeks back, Spentex had made a similar placement for an amount of Rs 64 crore.

Unlike in preferential allotments, there is no lock-in period for the shares issued through a QIP. The shares, which are expected to be listed in a week's time, have been subscribed to by FIIs, domestic mutual funds, insurance firms and P/E funds.

"Promoters are increasingly looking at this option to raise resources because the shares can be placed with a wider base of investors and also because the time taken to place the shares is far shorter," said Chetan Savla, co-head, equity, Kotak Mahindra Capital, the sole book runner for the placement.

According to Savla, at least 20 big firms are believed to have acquired enabling resolutions from their boards and shareholders to make similar placements.

Among the companies that have passed enabling resolutions to make QIPs are Suzlon, Asian Electronics, Ashapura Minechem and Apollo Tyres. The Apollo Tyres resolution includes a Rs 100 allotment to the promoters and a Rs 250 crore placement to institutions.

According to merchant bankers, companies are also opting for QIPs because there is no lock-in period for the shares. Several firms have decided to do QIPs rather than a GDR issue, which is costlier.