IPCL raises cash on global markets
INDIAN Petrochemicals Corp (IPCL) has become the first government-owned company to raise money on international markets.
The company has raised US$85 million through an issue of global depositary receipts (GDRs).
Goldman Sachs was the lead manager and Merrill Lynch the co-lead manager of the Euro-issue for the 25 billion rupee (about HK$6.19 billion) company in which the Indian Government has a 65 per cent equity stake.
It is expected that when the GDR is priced in London, it will be at around $4.65, a discount of about 13 per cent on the prevailing price of 166 rupees on Indian markets.
IPCL commenced its road shows with little fanfare in the last week of November, but managed to generate a good response, partly because of its promising outlook and the booming Indian petrochemicals sector.
The company has been a benefited from the high prices of plastics in India.
Corporate observers say that IPCL has been able to secure reasonable terms for the issue, considering the extremely difficult conditions that Indian companies face in international markets at the moment.
With much controversy surrounding the second postponement of the much-touted Euro-issue of Videsh Sanchar Nigam (VSNL), the Indian overseas telecommunications authority, the success of the IPCL issue is significant.
It may well open the door for other government owned bodies to tap funds abroad.
The Steel Authority of India is planning a GDR issue of $350 million in January and may push the issue through before VSNL finally decides to seek European funding.
Other public sector units planning issues in European markets are the Oil and Natural Gas Commission, which hopes to raise $1 billion.
Similar issues are being planned by Indian Oil and Hindustan Petroleum.
However, IPCL's issue could well be the last Indian Euro-issue this year.
Several private sector firms like Essar Shipping, Lloydsteel and Saw Pipes have decided to make offerings in Europe next year.
