Mumbai-based realty company The Phoenix Mills Ltd is planning to raise as much as Rs 1,000 crore ($187 million) through various equity or equity convertible route including a QIP or an overseas bond or equity issue in one or more tranches.
The company is raising the money to augment working capital requirements, to fast track the completion of the existing projects, financing acquisitions of new projects and for funding requirements for investments in subsidiaries or consolidation of holdings in project special purpose vehicle, it disclosed on Thursday.
Two analysts actively tracking the public listed company, who did not wish to be identified, said the company’s city assets are maturing and it makes sense to increase its stake in those projects.
“In most cases they hold anywhere between 35 to 70 per cent which they may want to increase,” said one of the analysts.
Another analyst said: “For the last two months we have been hearing that the firm is looking to buy out remaining stake of its JV partners in various projects and also to reduce debt. Since, these assets are coming to completion the company will now have to focus on land acquisition process for new projects too which will require funds.”
But he added that the company may not immediately dilute stake through an equity issue at the current market price.
At the current market price, raising Rs 1,000 crore would lead to as much as 24 per cent equity dilution. It is most likely that the firm will stagger the fund raising process.
When contacted by VCCircle, Shishir Shrivastava, managing director and CEO of The Phoenix Mills said that it is a routine resolution as an enabling factor. “We are not on the road to raise capital. Apart from giving exit to Kshitij Venture capital in the Chennai project we are not looking to buy out other private equity partners in other projects,” he said.
The company had recently struck an agreement to buy out Kshitij Venture Capital’s stake in a few projects in Chennai and it needs to pay out a little over Rs 100 crore in the next fifteen months (more on that here).
According to stock analysts the Chennai market city project SPV has a debt component of Rs 1,500 crore. They say even though mounting debt is not a concern as the firm had recently converted debt into lease rental discounting, raising money is crucial for the next stage of growth.
At present, Phoenix Mills has 5.2 million sqft of operational assets under management with an economic interest of 3.03 million sqft. The company has launched its commercial office space project of 0.9 million sqft in Kurla Market City. It is awaiting approval for its residential projects in Pune and Bangalore, which the company is expecting to launch by first half of next quarter.
