Unitech holds $1.5bn QIP issue

Market uncertainty cited as key reason.

Real estate major Unitech Ltd has put on hold a $1.5 billion qualified institutional placement (QIP) issue planned for the first quarter of 2008 in the light of the instability in the domestic stock markets and the global liquidity crunch.

The bellwether Sensex has fallen nearly 20 per cent this calendar. Unitech's shares have fallen 40 per cent from their peak of Rs 546.80 on January 2, 2008, to Rs 326.50 on Tuesday.

A QIP is a private placement of equity to institutional buyers approved by the market regulator. Unitech's decision follows the cancellation of initial public offers (IPOs) by Emaar MGF, another major property developer, and Wockhardt Hospitals, due to weak response from investors.

A senior executive of Unitech had told Business Standard that the company could place a maximum of 200 million shares in the QIP and dilute up to 12 per cent of shares on a total paid-up share capital of 1,623.37 million shares.

"We were in the planning stage, but considering the market fall and the lack of investor interest, we have decided to put our plans on hold. In fact, we did not file the issue documents for this reason," a senior company official said.

Investment banking sources added that they were adopting a wait-and-watch policy for the near term as institutional investors were extremely cautious about investing in current market conditions.

Unitech was expected to use the QIP proceeds for its upcoming projects and telecom foray, which it is planning in all 22 telecom circles of the country, for which it has received a licence from the government. According to its annual report for 2006-07, it has 50 million square feet of projects under construction.

The company is also foraying into the Mumbai real estate market with an investment of Rs 4,000 crore and is planning to build 50 malls across the country with an investment of Rs 20,000 crore.

Unitech has collected over Rs 3,100 crore on the Alternative Investment Market (AIM) of the London Stock Exchange through its arm Unitech Corporate Parks Plc (UCP).

It has also received approval from the Singapore Stock Exchange for an IPO for Unitech Office Trust, which will acquire its IT/ITeS firms in Noida, Gurgaon and Kolkata. It is expected to raise $700 million (Rs 2,800 crore) through this IPO.