PTC India QIP raises $105 million

PTC India, a power trading company, yesterday raised Rs5 billion ($105 million) through a qualified institutional placement that was completed before the Indian markets opened. The deal comes just one day after Suzlon Energy raised $110 million in another placement, suggesting that the market boost following the Indian government elections earlier this month has revived corporate willingness to tap the markets for capital. 

The Suzlon deal was, however, not a new share issue, but a sell-down of secondary shares by the promoter group, which will inject the funds raised back into the company.

Yesterday, a total of 66 million primary PTC shares were on offer, representing 22.67% of the post issue share capital. The deal, which did not go out with a range, was priced at Rs75 a share, which is equal to a 16.2% discount to Monday's closing price. The shares held up well in the wake of the placement and finished yesterday's trading only 3.8% lower.

The offering was fully subscribed after four hours of bookbuilding, closing approximately 2.4 times covered. A small number of mutual funds and foreign institutional investors acted as cornerstone investors. Geographically, the demand was well spread, said a source close to the deal. Many orders came from India and the rest of Asia, with some interest from Europe and the US.

Like most of the Indian market, PTC was a beneficiary of the greatly improved market sentiment that came about after the Congress Party-led coalition won another term in office. While the benchmark Sensex index soared 17.2% on the first day of trading after the elections, PTC shares were up only 11% on that day. But the company has made up for it since, finishing last week 17.6% higher. The share price gained another 2.8% on Monday, putting it at a level not seen since June last year.

With two Indian deals already this week, market watchers are already speculating that this could be the start of a flurry of local companies tapping the market for capital. One source said that a whole host of companies are preparing to go to market, but whether they get there or not will depend on whether the election-inspired momentum continues.

This is the eighth largest placement in India this year, according to Dealogic. Year-to-date, Indian placements have raised a total of $2.7 billion, split on 16 deals. Even though there has been a couple of big deals - a $781 million sell-down in DLF and a $535 million QIP by Indiabulls Real Estate, both property companies - levels are still 67% down on the $8.3 billion worth of deals that had been completed by this time last year.

PTC India, an initiative of the Indian government, is a power trading company with a market share of nearly 50%. It trades power on a long-term basis through dealings with the large power plants, and on a short-term basis to resolve supply and demand imbalances. Through a subsidiary, it has a 26% share in the Indian Energy Exchange.

Kotak Mahindra Capital and DSP Merrill Lynch were joint global coordinators and lead managers on the deal.