Pipavav Defence promoters hope to cut their pledged shares by half by March
Pipavav Defence promoters hope to cut their pledged shares by half by March.
We are looking to divest an infrastructure asset in February: Nikhil Gandhi
It is unusual for the promoter of a company to pledge all its shares with banks and financial institutions. But SKIL Infra, the primary promoter of Pipavav Defence and Offshore Engineering, formerly Pipavav Shipyard , which owns one of the biggest shipyards in the country, had done just that. Currently, 97.29 per cent of the promoter holding is pledged, down from 100 per cent in September 2010.
But now SKIL wants to slash the figure to nearly half by repaying Rs 750 crore by March 2012. "We are looking to divest an infrastructure asset owned by SKIL Infra by February," says Nikhil Gandhi, non-executive Chairman of Pipavav and Executive Chairman of SKIL. "That will fetch about Rs 700 crore. We will use this money to repay the loan." Talks are on with a large infrastructure company, unnamed so far, for the stake sale.
SKIL Infra, along with sister companies, holds 43.34 per cent of Pipavav. SKIL Infra sought a loan of Rs 1,250 crore in 2010 from a consortium to buy Punj Lloyd's 20 per cent stake in Pipavav and to make some investments in the education sector. The promoters pledged shares amounting to 22.78 per cent of the paid-up capital of Pipavav. They also pledged another19.39 per cent of their holding as secondary collateral for a long-term loan of Rs 1,100 crore. Of this, Rs 100 crore has been repaid. "We will repay another Rs 50 crore by March," says Gandhi.
Though Gandhi is confident of the planned divestment, experts believe the market is not conducive to deals at present, more so in the infrastructure sector. The total value of deals in the sector from April to December 2011 fell 35 per cent to $2.2 billion, compared to the same period the previous year, according to investment-tracker Venture Intelligence. "Acquirers might find the valuation attractive but the promoters of the target company may not want to sell at low prices," says Ajay Parmar, Head, Institutional Research, Emkay Global Financial Services. Pipavav may find the going more difficult as its share price, some analysts believe, is way ahead of its fundamentals, given the slowdown in the shipbuilding sector and Pipavav's big bet on defence, a tightly-regulated sector.
Will Gandhi succeed? The Pipavav scrip plummeted 30 per cent to Rs 55.50 in three trading sessions in November on investor concerns over the high proportion of pledged shares and what loans the shares were pledged against. The company followed it up with an announcement that it would sell 10 per cent stake to an unnamed international strategic investor for Rs 900 crore. The stock has since moved up to the Rs 65-68 range.
But now SKIL wants to slash the figure to nearly half by repaying Rs 750 crore by March 2012. "We are looking to divest an infrastructure asset owned by SKIL Infra by February," says Nikhil Gandhi, non-executive Chairman of Pipavav and Executive Chairman of SKIL. "That will fetch about Rs 700 crore. We will use this money to repay the loan." Talks are on with a large infrastructure company, unnamed so far, for the stake sale.
SKIL Infra, along with sister companies, holds 43.34 per cent of Pipavav. SKIL Infra sought a loan of Rs 1,250 crore in 2010 from a consortium to buy Punj Lloyd's 20 per cent stake in Pipavav and to make some investments in the education sector. The promoters pledged shares amounting to 22.78 per cent of the paid-up capital of Pipavav. They also pledged another19.39 per cent of their holding as secondary collateral for a long-term loan of Rs 1,100 crore. Of this, Rs 100 crore has been repaid. "We will repay another Rs 50 crore by March," says Gandhi.
Though Gandhi is confident of the planned divestment, experts believe the market is not conducive to deals at present, more so in the infrastructure sector. The total value of deals in the sector from April to December 2011 fell 35 per cent to $2.2 billion, compared to the same period the previous year, according to investment-tracker Venture Intelligence. "Acquirers might find the valuation attractive but the promoters of the target company may not want to sell at low prices," says Ajay Parmar, Head, Institutional Research, Emkay Global Financial Services. Pipavav may find the going more difficult as its share price, some analysts believe, is way ahead of its fundamentals, given the slowdown in the shipbuilding sector and Pipavav's big bet on defence, a tightly-regulated sector.
Will Gandhi succeed? The Pipavav scrip plummeted 30 per cent to Rs 55.50 in three trading sessions in November on investor concerns over the high proportion of pledged shares and what loans the shares were pledged against. The company followed it up with an announcement that it would sell 10 per cent stake to an unnamed international strategic investor for Rs 900 crore. The stock has since moved up to the Rs 65-68 range.
