Suraj Estate Developers Raise Rs. 500 Crore Through Preferential Issue

Founded in 1986, Suraj Estate Developers Limited is a real estate construction company specializing in the development of residential and commercial properties in the South Central Mumbai area. Yesterday, the company announced that its board has approved plans to raise up to Rs. 500 crore and the funds will be raised through the issuance of preferential shares to eligible shareholders and convertible warrants.

Details of the Share Issue

The company plans to issue 56.05 lakh equity shares with a face value of Rs.5 each, at an issue price of Rs.714 per share which is  expected to raise approximately Rs.400.24 crore. The issue price represents a 12.8% discount to the company’s closing price yesterday.

Prominent investors in this preferential share issue include Vanaja Sundar Iyer, who already holds a 1.02% stake in Suraj Estate through Si Investments and Broking Pvt. Ltd. Another key investor is Kewal Kiran Clothing, a listed company that will be allotted 2.5 lakh equity shares. Prior to this, Kewal Kiran had no stake in Suraj Estate. Additionally, broking firm Prabhudas Lilladher will also receive shares in this issue.

Convertible Warrants Allocation

In addition to the equity shares, Suraj Estate will issue 13.3 lakh convertible warrants at Rs.750 per warrant, raising an additional Rs.99 crore which reflects an 8.4% discount to the closing price of the company’s shares yesterday. The warrants, allotted to Ramesh Sawalram Saraogi, who holds a 2.03% stake in the company through Navratri Share Trading Pvt. Ltd., can be converted into equity shares within 18 months from the date of allotment.

Market Performance

Suraj Estate Developers recently completed its IPO in 2023, with shares priced at Rs.360. Since then, the stock has more than doubled in value, with a 150% surge this year alone. Despite briefly dipping below its IPO price to an all-time low of Rs.255, the stock closed 2.5% higher on Monday at Rs.819 which is back to Rs.809 today..

Conclusion: In conclusion, Suraj Estate Developers’ Rs.500 crore fundraising through preferential shares and warrants reflects a strategic capital management. With key stakeholders backing the company and a 150% stock surge this year, this positions Suraj Estate for further growth and reinforces its position in this competitive real estate market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.