Unitech to sell stake, raise $500 m

Unitech Ltd, India's second-largest real estate developer, is looking to raise about $350-500 million (up to Rs 2,500 crore) from a group of foreign investors, in a desperate bid to reduce its debt mountain of Rs 8,300 crore. The company is expected to raise the money by the end of March. Sanjay Chandra, managing director of Unitech, refused to comment. "We would not like to comment on market rumours and speculation".

The company's senior management team, led by founder Ramesh Chandra, is said to be in the tax haven of Cayman Islands in the Carribbean, negotiating the stake deal. Unitech promoters hold 74.56% stake in the company. Sources familiar with the development said the sale of stake is likely to be less than 14.99% so that it does not trigger an open offer.

On Monday, the company announced plans to raise long-term funds up to Rs 5,000 crore through issuance of further securities. Last year, during the boom time, Unitech had planned a qualified institutional placement (QIP) issue for which they had also conducted a roadshow in Mumbai. However, the attempt failed because the Unitech share price was hovering around Rs 650 at point, whereas the company was seeking Rs 750 per share.
Sources said Unitech may be planning a divestment along similar lines. "This may also be because the company's plan to raise about Rs 4,000 crore through distress sale hasn't met with success," said a sector analyst, who did not wish to be named.

"No one goes all the way to Cayman Islands to do a deal but if Chandra is in Cayman then it surely means he will come back with money," said the analyst.It is likely that the stake will be bought not by one but by a group of private equity investors. Earlier in November, Chandra had said Unitech would halve its Rs 8,300 crore debt within 5 to 7 months.