Pipavav makes pref issue to intl investor, shares up

Pipavav Defence and Offshore Engineering, a shipbuilder, said on Tuesday it will issue 81.9 million shares on preferential basis to an international strategic investor at not-less-than 110 rupees per share.

Reacting to the news, shares of the company rose as much as 10 percent to hit 62 rupees.

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The announcement comes a day after promoter SKIL Infrastructure clarified neither has it sold any Pipavav Defence shares nor there is any shares held by it on margin funding. The clarification was in response to a 20 percent fall in the stock on Friday.

In the notice to the stock exchange, the company did not disclose the name of the investor, but said the investment will be for long term, with a right to nominate one director on board.

"The investor will initially subscribe to 5 percent of the paid up capital of the company and within specified time will increase its holding in the company up to 10 percent of the paid-up," the company said.

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The investor, which is a global conglomerate with interest in defence sector, will bring in critical technology required for manufacture systems required by armed forces, the statement said.

Nikhil Gandhi, chairman of Pipavav Defence, had earlier said his group will be investing over $1 billion to build warships.

In early September, the company had set up a joint venture with state-run Mazagon Dock to build submarines and warships.

The venture, however, did not take off as the defence ministry decided to put on hold the move to study the complaints it received about it.

At 12:29 p.m., the stock on the National Stock Exchange was at 59.80 rupees, up 6 percent in a Mumbai market that is up 1 percent.