Deal with ICICI Bank values Jaiprakash Infratech more than parent
NEW DELHI: Jaiprakash Associates Ltd has raised Rs 1,150 crore by selling a 1% equity stake in its unit Jaypee Infratech Ltd to ICICI Bank for Rs 250 crore and securing a long-term loan of Rs 900 crore.
The stake sale values Jaypee Infratech at Rs 25,000 crore which is more than Jaiprakash Associates market worth at Rs 23,400 crore before the stake sale was announced. ICICI Bank will subscribe to “10 million (1 crore) equity shares of Rs 10 each, representing 1% of the paid up share capital”, the company said in a statement on Tuesday.
“This kind of valuation for an equity stake sale in Jaypee Infratech was more or less expected,” said an analyst with a local research and brokerage firm, adding, “However, a 1% stake sale cannot be taken as a benchmark for valuation.”
For the Rs 900-crore loan, the cost of borrowing can be anywhere about 9-10%, going by the interest rates these days, said another analyst requesting anonymity.
A company spokesperson, however, declined to reveal the cost of borrowing.
The money will most likely be used to fund Jaypee Infratech’s Taj Expressway project to construct a highway connecting Agra to Greater Noida in Uttar Pradesh, analysts say.
Jaypee Infratech is a wholly-owned subsidiary of Jaiprakash Associates and was promoted to develop, construct and operate the 165-km long toll-controlled Taj Expressway.
Jaypee Infratech also has the rights to develop 2.5 crore square meters of land along the expressway for commercial, residential, amusement, industrial and institutional purposes.
Earlier, Jaypee Infratech was in talks with ICICI Venture Funds Management Co to raise similar funds, but failed to reach an agreement.
Jaiprakash Associates stock rose 16.38% on the Bombay Stock Exchange to close at Rs 233.10.
Jaiprakash Associates has also been awarded a contract by the Uttar Pradesh Development Authority to build a 1,047-km long expressway connecting Greater Noida to Ballia in the state.
The company has deposited Rs 1,491 crore as a bank guarantee for the project.
Jaypee Associates will execute the 1,047-km long Ganga Expressway project through its unit Jaypee Ganga Infrastructure Corporation Ltd.
a_shaleen@dnaindia.net
