Shares of real estate developer DB Realty have witnessed strong rally in recent times amid speculation that Godrej Properties would invest in the company and form a joint venture for slum rehabilitation in Mumbai. However, the deal could not materialise as the board of directors of Godrej Properties withdrew from the plan citing negative feedback from stakeholders and minority investors.
In a fresh development, the debt-laden company has proposed to raise funds by issuing 5 crore convertible warrants to Rakesh Jhunjhunwala’s RARE Investments, his wife, Rekha Jhunjhunwala, and others.
Boosted by new fund raising plan, DB Realty shares hit an upper circuit of 5% on Wednesday, touching a seven-year high of ₹116.70 on the BSE. The stock has been continuously hitting the upper circuit for the past eight sessions amid fund raising plans. There was a surge in volume trade as 7.96 lakh shares worth ₹9.2 crore changed hands over the counter compared to two-week average volume of 4.41 lakh scrips. The market capitalisation of the company surged to ₹2,838.8 crore.
The realty stock was trading higher than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. Technically, the stock moved in a ‘bullish’ range from ‘mildly bullish’ on December 23, 2021, at ₹43.40, as per stock research platform Markets Mojo.
The share has been gaining for the last 11 sessions and has risen 59% during this period. In the past one week, the stock price has gained 21%, while it zoomed 165% in six weeks. It has surged more than 400% in past six months and 520% during one year.
DB Realty in an exchange filing on Wednesday said that its board has approved raising of funds through issue of 5 crore warrants convertible into equivalent number of equity shares of the face value of ₹10 each to non-promoter investors on a preferential basis. The warrents, which are subject to shareholders and regulatory approvals, will be issued to non-promoter investors, including Rakesh Jhunjhunwala-led RARE Enterprises, Rekha Jhunjhunwala, KIFS Dealers, Aditya Chandak and Abhay Chandak.
The fund raise is in addition to 7.7 crore warrants that had been already approved in board meeting held on February 3, 2022. The company proposed to issue 7.7 crore warrants to promoter group and Pinnacle Investments, taking the total warrants issue to 12.17 crore.
The company proposed to issue 10 million warrants to Rekha Jhunjhunwala and 10 million warrants to Rakesh Jhunjhunwala-owned RARE Enterprises. The Jhunjhunwala family currently owns 2.06% stake in the company, as per the December shareholding data.
“The total fund infusion into DB Realty Limited post conversions of warrants allotted and proposed to be allotted to Pinnacle Investments, DB Promoters and New Investors will be approximately ₹1,575 crore. The funds raised through the warrants shall be utilised primarily to repay debt and augment long term capital requirement of the company,” the company said.
According to latest shareholding pattern available on the BSE, promoters own 63.03% stake in the company, while remaining 36.97 are owned by public shareholders.