By 06 June, 2011

Hirco plc, the AIM-listed investment vehicle for Mumbai-based property builder Hiranandani, is raising a little over $19 million (£12 million) from new and existing shareholder through a placement. The company will issue 24 million fresh shares at 50 pence, a discount of 21.6% to the mid-market closing price of 63.75 pence on 1 June 2011.

The issue will also be subscribed by existing major shareholders like Standard Life and HSBC Private Bank. While HSBC Private Bank currently owns 31.46% stake in Hirco, 14.64% is held by Standard Life.

Hirco had earlier said that it would raise funding to meet working capital requirements for the medium term. The firm has called for an extraordinary general meeting on 28 June 2011 to approve the issue.

Hirco recently reported a profit for the six-month period ending March 2011 of $44.66 million (£27.2 million) with NAV during the period rising up by 5.36%. Hirco has invested £350.8 million in four developments which were valued by property consultants Jones Lang LaSalle Meghraj at £513.5 million on 30 September 2010. Hirco owns stake in one residential and one commercial development each in Panvel, Mumbai and Chennai.

Hirco also said during its results that a merger of its shareholding with those of Hiranandani family in the projects continues to be of interest. While Hirco has started talks with Hiranandani family in February, no acceptable agreement could be reached upon due to valuation issues. In 2008, Hirco had floated the idea of a merger which was voted down by its shareholders. Hirco also said it is also exploring options like selling its stake along with Hiranandani family to potential buyers.

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