India's Unitech shares rise 4 pct on spin off plan
Shares in Unitech Ltd rose more than 4 per cent today after the second-largest listed Indian real estate firm said it would spin off some businesses, including telecoms into a separate company.business Updated: Apr 21, 2010 12:30 IST
Shares in Unitech Ltd rose more than 4 per cent on Wednesday after the second-largest listed Indian real estate firm said it would spin off some businesses, including telecoms into a separate company.
"Good thing is they can focus on the businesses separately," said Neeraj Dewan, director at Quantum Securities in New Delhi.
"Nobody was happy with a real estate firm owning assets in telecoms, hotels. They should have done it earlier. There's no immediate short-term benefit from this, but for the long term, it's a good move," he said.
Unitech Managing Director Sanjay Chandra told Reuters the spin-off would help unlock value, with the infrastructure businesses expected to command a price separately.
"All these assets were not being valued by the markets at all. We were primarily known as a real estate company," Chandra said. "Now they can not cut it off in a rounding off error."
"We did have an infrastructure expertise in the past also, but we were not leveraging it in the last so many years. Now with the whole emphasis on infrastructure, we felt we can grow another Unitech equivalent in infrastructure," he said.
New Delhi-based Unitech said in a corporate presentation on its website the spin-off would help the businesses focus on growth with independent management strategies and also provides flexibility to raise financing.
"Infrastructure business is not hindered by restrictions on real estate financing," Unitech said, adding foreign investment, local and foreign borrowing norms were stricter for real estate than for infrastructure.
For every one share held in Unitech Ltd, shareholders will get one share of the new firm Unitech Infra Ltd.
Unitech said the spin-off would be effective April 1, and after getting regulatory approvals, Unitech Infra would be listed on the Bombay Stock Exchange and the National Stock Exchange.
First Published: Apr 21, 2010 12:26 IST