Mumbai-based AK Capital Services, a leading player in domestic bond market, is looking at

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diluting around 20-23 per cent stake through a qualified institutional placement (QIP) to raise around Rs 400 crore by the end of FY11. According to A K Mittal, managing director, the company will see its book size grow at around 20-25 per cent this year funded by the additional capital to be raised. The promoters will then make a preferential allotment to bring their holding back to 51 per cent, Mittal said in an interview with Sneha Shah.

How much money are you looking at raising through QIP, and how?

We got the board approval last Wednesday for raising money via QIP and will look at the issue by the end of the present financial year.

We are looking at offloading around 20-23 per cent of the stake by issuing around 20 lakh shares which might be done in tranches.

Although the promoters’ stake will go down to 46 per cent, we have the options of either issuing preferential allotment or go for creeping back (a tool given by Sebi for promoters to buy shares from open market) to bring our holding back to the 51 per cent level.

Once the shareholders at large approve the same on September 4, we will appoint merchant bankers. We are looking for long-term investors and not short-term investors like hedge funds.

What will the money raised via QIP be used for?

The QIP is aimed to fund both the organic and inorganic growth of the company. Reaping the benefits of the encouraging market opportunities, the company wishes to capitalise the growth prospects through NBFCs and wealth management services for its clients. We want to service big companies, for which we need to increase our book size.

How big do you see the opportunity in the bond market this year?

The bond market is expected to see around 100 per cent jump this year.

In the year 2009-10, we saw Rs 1.72 lakh crore of money being raised through bonds and this year we expect it to go up to Rs 3.4 lakh crore.

A K Capital has always maintained around 25 per cent of the bond market. We think we will be able to maintain that with the incremental growth too.

How has the company’s performance been in the first quarter?

The first quarter has been very good as bond issuances worth Rs 55,000 crore has taken place and we expect the momentum to continue for the rest of the year.

Profit after tax rose by 30 per cent to Rs 14 crore for the quarter.

The total income for the quarter went up by 21 per cent to Rs 40.60 crore. The bond issuances for the company went up to Rs 19,337 crore for the April-June quarter against Rs 5,305.90 crore in the same period of the previous year.

ak capital/BSE Rs 491.75 q

snehashah

@mydigitalfc.com