JSW to raise a billion dollars through QIP

After realty majors, it's the turn of steelmakers to board the qualified institutional placement (QIP) bandwagon. JSW Steel on Thursday announced plans to raise $1 billion through a QIP. It will use the money to reduce debt and part-finance expansion plans at Vijayanagar. The company aims to cut its debt-equity ratio to 1.5:1 from 1.79:1.

At Thursday's Rs 550 per share closing price, the steelmaker will have to issue 8.67 crore fresh shares to subscribers to raise $1 billion. Following the fresh issue, the share base will swell from the current 18.7 crore to 27.37 crore, leading to a 46% equity dilution. The promoter holding is expected to fall to 31% from 45.02% as on March 31.

The steelmaker is expected to generate enough cash flows to meet its debt servicing obligations in FY10. Further, with this QIP issue, it will be in a healthier position.