G M Rao to raise stake in GMR Infra

G M Rao, chairman of the publicly-held GMR Infrastructure, plans to increase his stake in the company by about five per cent through the subscription of 180 million warrants for which he will pay about Rs 600 crore over an 18-month period. As and when the shareholders approve the warrant issue to GMR Infra Venture LLP - a promoter entity of which the ultimate beneficiary will be G M Rao - GMR Infra Ventures will be paying 25 per cent of the Rs 600 crore upfront.

This move by the promoter entity comes closely after GMR Holdings, the flagship holding company of the promoters, shed about eight per cent in GMR Infrastructure through a qualified institutional placement (QIP) issue by which close to Rs 1,500 crore was raised recently. The promoter's stake in GMR Infrastructure after the QIP issue is about 64 per cent.

This move by G M Rao to personally increase his stake comes at a time when the company's performance is getting stabilised after nearly 18-months of fluid situation during which it had to battle high leverage. As a result, the company exited assets across airport, power and highways verticals and it was able to release equity worth about Rs 4,000 crore by end of the last financial year.

G M Rao had in 2011 pledged to create an endowment worth about Rs 1,500 crore for his family-promoted GMR Varalakshmi Foundation, an organisation that undertakes charitable activities for the poor. According to a statement from GMR at that time, that endowment was equivalent to the entire portion of G M Rao's personal share of the entire business. GMR Varalakshmi Foundation (a Section 25 not-for profit company) is an integral part of the GMR Group and is a professionally-run organisation with presence in 22 locations in India and abroad.

According to industry analysts tracking GMR Infrastructure, the management proposes to utilise the QIP's proceeds and infusion from promoters to reduce the Rs 3,500-crore corporate debt, which is due for repayment within the next 18-24 months. "GMR Infrastructure will continue to explore other funding options to reduce corporate debt and pursue growth opportunities, including listing its energy and airport verticals, divesting stake in projects and asset sales over the medium term," Shankar K, an analyst with Edelweiss Securities, said in a recent report.

GMR Group