Binani Cem IPO clears hurdle, price seen at Rs 80-95

Apr 26, 2007
Ashish Rukhaiyar
MUMBAI

THE imbroglio over valuations resolved, the public issue of Binani Cements (BCL), is finally slated to hit the capital market in the first half of May. According to sources, the price band for the forthcoming issue has been fixed in the range of Rs 80 to Rs 95.

The issue had been in dispute on account of valuation differences between the lead manager (ICICI Securities) and JP Morgan Special Situations Asia Corporation. The JP Morgan entity was reportedly asking for a higher price to offload a part of its stake in the cement company.

ET had reported on April 11 that JP Morgan Special Situations Asia Corporation, which is a wholly-owned subsidiary of JP Morgan Chase, was keen on a price of around Rs 125 per share that was not acceptable to the merchant bankers. It was rumoured that merchant bankers were zooming in on a price less than Rs 100 per share, keeping in the mind the market sentiment, especially towards cement companies.

JP Morgan Special Situations Asia Corporation is offloading 2.05 crore shares, or 10.09% stake, in the company, through IPO. The entity, through its subsidiary JP Morgan Special Situations (Mauritius), holds a 25% stake in the company.

Further, at a price of Rs 95 per share, JP Morgan will be able to net nearly Rs 195 crore for their 10.09% stake. Interestingly, this would also mean a profit of Rs 71 per share for JP Morgan, which had acquired a 25% stake in the company in September 2005 by purchasing equity from Binani Industries at a price of Rs 24 per share.

The draft offer document for the issue was filed in November last year and the market regulator has already issued some observations. In fact, this is the second time that the document has been filed with Sebi.

Meanwhile, as per a stock exchange announcement by Binani Industries, which holds 65% stake in the cement company, BCL has declared a dividend of 20% subject to requisite approvals and that Binani Industries will receive an amount of Rs 26.40 crore.

An email query sent to the company regarding the price band remained unanswered till the time of going to press.

Valuation row holds up Binani IPO