There are reports that Blackstone may be interested in picking up a stake in Bombay Dyeing. However, while Bombay Dyeing may be in talks with private equity players including Blackstone, etc. the point to be noted out here is that there are two things which might actually be something that might worry investors from believing whether the deal might happen or not.
Firstly, the total promoters stake currently stands at 43%, Bombay Dyeing being the flagship company of the Nusli Wadia group, and if they give out about 14.5-15%, the promoters stake goes well below 30% which is something that a flagship company of a traditional group might not be too keen to do.
If that is debatable, another point is the fact that the positives for Bombay Dyeing currently are as follows. 2 million odd sq ft of property at Dadar and Worli. The present value of the properties on a very conservative basis comes to around Rs 4,000-5,000 odd crore. The current market cap of Bombay Dyeing is around Rs 2,500 odd crore.
The point to be raised out here is the fact that, if indeed the properties are valued at Rs 5,000 odd crore, considering the way real estate in Mumbai is moving up, and the kind of triggers the company may get as a result of the development of those properties, why would a promoter who holds only 43% of his stake might be willing to dilute 15% of it in a company which is values at almost half the times on a conservative basis right now.
If indeed the development does happen and the market cap does go up to about Rs 4,000-5,000 odd crore of the NAV of the properties, then indeed they might get much more for the same 15% or they might actually have to dilute only 7.5% for raising the kind of money that they are looking to raise right now.
Read more in The Moneycontrol article.
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Bombay Dyeing's Press Statement.
In light of speculative articles in the media about the possible investment in Bombay Dyeing by private equity players, The Bombay Dyeing & Manufacturing Co. Ltd. would like to categorically state that these reports are baseless, speculative and untrue. A similar note has been shared with the Bombay Stock Exchange & National Stock Exchange respectively this afternoon – September 13th 2007.
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