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Hindalco looking to raise Rs3,300 crore through QIP

LiveMint logoLiveMint 02-03-2017 Swaraj Singh Dhanjal

Mumbai: Hindalco Industries Ltd, India’s biggest aluminum producer, has embarked on a fundraising process to raise around approximately Rs3,300 crore through a qualified institutional placement (QIP), said three people aware of the development.

Hindalco has appointed Citigroup Global Markets India Pvt. Ltd, JM Financial Institutional Securities Ltd, Axis Capital Ltd, Bank of America Merrill Lynch and SBI Capital Markets Ltd to manage the QIP fundraising process, said one of the three persons cited above, requesting anonymity, as he is not authorized to speak with the media.

“The company and the investment banks are already on investor roadshows. The QIP is expected to be launched soon,” said the second person cited above, also requesting anonymity.

QIP is a capital-raising tool through which listed companies can issue equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into equity shares to a qualified institutional buyer.

Hindalco has been looking to raise equity capital for a long time now, but low commodity prices had hurt the sentiment for the sector in the past resulting in the company not going ahead with its plans, he added.

The company had last attempted to raise equity capital through a QIP in 2014. Mint reported in November 2014 that Hindalco was planning to raise Rs3,000 crore through a QIP and had appointed investment banks for the same.

Dharmesh Mehta, managing director and chief executive officer at Axis Capital, refused to comment. Emails sent to spokespersons at JM Financial, Citibank, Bank of America Merrill Lynch and SBI Capital did not elicit any response.

A spokesperson for Hindalco could not be immediately reached for comments.

Hindalco’s equity-raising plans follow the refinancing of debt at group entity Novelis Inc.

Novelis, a global manufacturer of rolled aluminum products and the world’s largest recycler of aluminum, raised $1.15 billion through a bond issuance in the US to retire debt obligations maturing in 2017.

Hindalco reported a net profit in the December quarter from a loss in the year-ago period.

Standalone net profit in the third quarter stood at Rs320.56 crore compared to a loss of Rs32.75 crore a year ago. Net sales rose 13.7% to Rs9,914.81 crore from Rs8,715.94 crore a year ago because of a rise in average realization for both aluminium and copper, weaker rupee and higher aluminium volume, Hindalco said in a statement on 13 February.

Hindalco’s QIP will be one of the biggest such issuances to hit the market in almost a year.

In 2016, 16 companies raised Rs4,712 crore through the QIP route, according to data from primary market tracker Prime Database. So far in 2017, only two companies have raised Rs274.6 crore through QIPs, data shows.

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