Chatterjee: Raising funds

Mumbai, July 21: A day after Tata Steel raised $500 million through a global depositary receipts (GDR) issue, Tata Power is following suit with an overseas flotation.

Tata Power launched a GDR issuance of $250 million on Tuesday with an option to retain a higher amount, the company said in a communication to the stock exchanges.

The move follows an equity flotation by Tata Steel, another Tata group company, that raised $500 million by listing its GDRs on the London Stock Exchange (LSE). This is one of the largest GDR offerings by an Indian company on the LSE.

The Tata Steel issue met with a positive response and the company increased the size of the offer from $400 million to $500 million as the GDR was well received by good quality investors.

“Though the company has adequate liquidity with no material repayments in the next 12 months, the equity raising exercise will help in capitalising the balance sheet and enable deployment in highly attractive projects — like the ongoing expansion of Jamshedpur in India and overseas mining projects,” said Tata Steel group chief financial officer Koushik Chatterjee.

In recent times, several Indian companies have begun raising equity overseas as liquidity eases in global markets and these issues have been well received in foreign markets.

Some of the Indian companies that have listed overseas in the last few weeks include Sterlite Industries that raised $1.5 billion through an American Depositary Receipts (ADR) sale.

Suzlon Energy also raised $201.91 million through a GDR and zero coupon convertible bonds, the company said in a statement to the stock exchanges on Tuesday.

“The success of the Sterlite issue followed by that of Tata Steel is encouraging other Indian companies to raise money overseas and we expect others to announce plans overseas whether it is to tide over working capital needs or to expand operations,” said an analyst.