Ahead of its initial public offer, Mahindra Holidays and Resorts India Ltd (MHRIL), a subsidiary of Mahindra Holdings and Finance Ltd, has finalised a private placement with a bank which values the company at $1 billion.
Sources said that the deal, likely to be announced on Tuesday, will see the Indian bank acquire a 2% stake in MHRIL for a consideration of around Rs 80 crore. When contacted, chairman Arun Nanda refused comment.
MHRIL, which filed a draft red herring prospectus with Securities and Exchange Board of India (Sebi) last month, is targeting an IPO in the first quarter of the year. It plans to issue 42 lakh fresh shares through the IPO. Mahindra Holdings and Finance is a wholly-owned subsidiary of Mahindra & Mahindra.
On Monday, M&M shares closed 1.5% lower at Rs 810.60 on the Bombay Stock Exchange, which rose 125 points to 20,813.
At present, MHRIL has a capital base of 78.33 crore and the company had intended to do a pre-IPO private placement of up to 3%. In addition, the promoters intend to sell 5% stake in the company through the IPO while another 5% capital will be raised through fresh issue of shares.
Sources said that the Rs 4,000 crore valuation for MHRIL, which was started with an initial capital of Rs 18 crore, would in turn push up the valuation of M&M.
Source: Times of India