SBI Caps raises cash for GSPC as IPO beckons

Vol 13, PW 15 (14 Jan 10) Midstream & Downstream

Investment banker SBI Caps has raised much-needed cash for GSPC by spreading 5% of the company’s equity among seven Gujarat government companies and two financial institutions.

“This is the first time GSPC has diluted its equity,â€‌ says a leading market analyst. PETROWATCH learns SBI Caps has raised Rs689.35cr ($150m) from these nine companies (see below) and has added Rs350cr ($76m) of its own cash to the mix! “Half the money has been credited into GSPC’s bank account,â€‌ confirmed a source on January 7.

“The rest will come in after GSPC signs more agreements next week.â€‌ GSPC signed share subscription agreements with its seven sister companies at a meeting on December 14 chaired by earlier Gujarat government chief secretary D.

Rajagopalan. “Investors are upbeat about GSPC’s project execution skills and professional management,â€‌ we hear.

GSPC will sign another agreement with SBI Caps for its contribution around January 15. According to Gandhinagar sources, GSPC directors won approval from the Gujarat government to dilute 15% of the company’s equity in mid-2009.

These sources say GSPC earlier planned to raise funds only from financial institutions like SBI, LIC and others. “But chief minister Narendra Modi intervened,â€‌ says a Gandhinagar source, “and asked it to offer stakes to Gujarat government companies.

â€‌ Separately, GSPC is preparing its Draft Red Herring Prospectus (DRHP), which it will file with the Securities and Exchange Board of India (SEBI) by next month (February). This DRHP – outlining GSPC’s strengths and weakness - is the first step toward its much awaited and talked about IPO.

GSPC aims to raise another Rs4000cr with the IPO and has an internal target to launch by March 2010. In private, most believe the IPO is unlikely to hit the market before May.

Name of company investing in GSPC Amount Gujarat Alkalies & Chemicals (GACL) Rs12.50cr ($2.7m) Gujarat Industrial Development Corporation (GIDC) Rs100cr ($21.7m) Gujarat Mineral Development Corporation (GMDC) Rs50cr ($10.8m) Gujarat Narmada Fertilisers Company (GNFC) Rs12.50cr ($2.7m) Gujarat State Fertilisers & Chemicals (GSFC) Rs149.85 ($32.5m) Gujarat State Investments (GSIL) Rs110cr ($23.9m) Gujarat Industrial Investment Corporation (GIIC) Rs4.5cr ($0.98m) Industrial Development Bank of India (IDBI) Rs150cr ($32.6m) IFCI Rs100cr ($21.7m) TOTAL Rs689.35cr ($150m)