Mahindra Lifespace Developers Ltd, the realty arm of Mahindra and Mahindra Group, has sought shareholders’ approval to raise close to Rs 400 crore ($60 million) through a qualified institutional placement (QIP), the company said in its notification to the exchanges.
The firm has not disclosed the purpose of the fresh funding which would lead to around 20 per cent equity dilution but analysts indicate that the company wants the enabling resolution ready so that the money will be used for acquiring land.
In July this year the developer had forged a joint venture with the investment arm of UK’s Standard Chartered Bank to invest Rs 500 crore each to develop realty projects across the country. The joint venture is called Watsonia Developers. The first two projects under this JV would be premium residential developments in Gurgaon and Bangalore.
Mahindra Lifespace scrip rose 0.83 per cent and closed at Rs 404.95 per share on the BSE in a strong Mumbai market on Monday.
At the current market price, if the firm goes ahead and raise the entire Rs 400 crore, the promoter holding in the company will shrink to 40.5 per cent from around 51 per cent currently.
Last month the company decided to raise the limit for foreign institutional investors (FII) holding in the share capital of the company to 49 per cent. As of June 30, 2013, foreign (FIIs and NRI) holding in the firm was pegged at 29.3 per cent.
(Edited by Joby Puthuparampil Johnson)