Prestige Estates Projects Ltd., a leading Indian real estate developer, has launched a Qualified Institutional Placement (QIP) to raise up to INR 5,000 crore from institutional investors. The company has set the floor price for the QIP at INR 1,755.09 per share, with the indicative issue price expected at a 5% discount. The funds raised will be used to repay existing borrowings, acquire land or land development rights, invest in subsidiaries and joint ventures, and for general corporate purposes. Prestige Estates is also monetizing assets from its hospitality segment through a share issue by its wholly-owned subsidiary. The move aims to strengthen the company's financial position and fuel its ambitious growth plans in the real estate market.
Prestige Estates Projects Ltd., a leading real estate developer, has announced the launch of a Qualified Institutional Placement (QIP) to raise up to INR 5,000 crore from eligible institutional investors. The company has set the floor price for the QIP at INR 1,755.09 per share, which is in line with the current market price. According to sources, the indicative issue price is expected to be at a 5% discount to the floor price, at INR 1,674 per share.
The board of Prestige Estates had previously approved the plan to raise up to INR 5,000 crore through a QIP or other permissible methods. The share sale is likely to result in an equity dilution of 7.45% of the pre-issue share capital.
In addition to the QIP, Prestige Estates is also monetizing assets of its hospitality segment through Prestige Hospitality Ventures, a wholly-owned subsidiary, by issuing shares.
The company plans to utilize the funds raised through the QIP for multiple purposes. Firstly, it intends to repay or prepay a portion of its existing borrowings, thereby optimizing its capital structure. Secondly, the company will use the proceeds to acquire land or land development rights, which will strengthen its land bank and support future growth. Additionally, the funds will be invested in subsidiaries and joint ventures to finance ongoing projects and undertake new developments.
The announcement of the QIP has been well-received by the market, with Prestige Estates' shares witnessing a sharp spike towards the end of the trading session, closing 2.2% higher at INR 1,753. The stock has also gained 47% so far in 2024, reflecting the market's confidence in the company's growth prospects.
The launch of the INR 5,000 crore QIP by Prestige Estates is a strategic move to bolster the company's financial position and fuel its ambitious growth plans. This capital raise, coupled with the monetization of the hospitality assets, positions Prestige Estates as a well-capitalized and agile real estate player, set to capitalize on the growth opportunities in the market and deliver value to its shareholders.
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