Platinum Investment Takes 5.16% Stake In Unitech

Australia's Platinum Investment Management Ltd has raised its stake in Unitech Ltd to 5.16% over the past month by investing $125 million, a person familiar with the matter said Monday.

Before the transaction, the Australian fund held a 1.19% stake in the company and the person, who spoke to Dow Jones Newswires on condition of anonymity, said Platinum may continue to raise its holding in the Indian property developer.

Platinum acquired the stake in phases from the open market, Unitech earlier said in a filing with the Bombay Stock Exchange, but didn't provide details like the cost of the transactions.

Unitech is among companies which face investigations over a 2008 government allotment of licenses to provide mobile telecommunication services.

According to the Central Bureau of Investigation and a federal audit body, the licenses were sold deliberately at prices sharply below market levels, resulting in huge losses to the government.

Unitech Wireless Ltd was one of the companies that got the licenses. Unitech later sold a 67.25% stake in the telecom business to Norway's Telenor ASA for about 61.36 billion rupees, and Unitech Wireless now offers services under the Uninor brand.

Despite its telecom troubles, analysts expect Unitech's shares to offer good returns in the near term, given its land bank.

"The discrepancy between Unitech's stock price and land valuation is wide at the moment," Saurabh Kumar and Gunjan Prithyani, analysts at J.P. Morgan, wrote in a recent report.

The stock has declined 60% since September and property prices in two of its key markets--Gurgaon and Noida--have been rising, they said. "The stock is trading at a 40% discount to its land value, which we believe is cheap," they said.