Realty cos rush with Rs 14,000-cr IPO push
The market’s almost 75% sprint in just over four months has given confidence to the cash-strapped real estate sector. But the performance of Oil India on debut day may decide the fate of these upcoming IPOs CASH-STARVED realty sector is sprinting to market regulator Sebi to raise around Rs 14,000 crore or $3 billion in initial public offer (IPO). At least seven realty companies, including Lodha Developers, Sahara Prime City, Emaar MGF and BPTP, have either filed the draft red herring prospectus (DRHP) with Sebi since Friday or plan to do it on Wednesday. “Every company intending to do an IPO is in a hurry to file DRHP, as any delay beyond September 30 will force them to get their books audited again, which might delay the whole process,” a banker handling one large realty firm’s IPO said. The banker didn’t want him or his client to be named for regulatory reasons. The audited balance sheet is valid for six months for filing prospectus. In case the company files the DRHP after six months of the annual report, it needs to incorporate audited numbers for preceding the six-month period. Indian stock markets have been rallying this year with Sensex registering a gain of 75% since January to close at 16853 on Tuesday. Real estate companies have led India Inc in raising cash, as the stock market slowly recovered since the middle of the year. Several listed realty firms, including DLF, Unitech, Indiabulls Real Estate, Sobha Developers and HDIL, went in for successful qualified institutional placements (QIP) or promoter stake sale, raising over $2 billion. The ability of listed realty players to raise funds gave privately-held firms the confidence to test the primary market. It was the failure of realty firm Emaar MGF’s IPO early 2008 that marked the beginning of the slump in the primary market. Now Emaar MGF, a joint venture between Delhi-based MGF and Dubai-based Emaar, plans to re-launch its IPO to raise Rs 3,850 crore for 10% stake dilution. In addition, the promoter is also divesting 1.17-crore shares to mop up around Rs 400 crore. This means Emaar MGF is looking at a valuation of Rs 38,500 crore, against a valuation of Rs 70,000 crore last time round. It filed the prospectus on Tuesday. Sahara Prime City, Lodha Developers and Kumar Developers too have filed DRHP with Sebi on Tuesday. Delhi-based Ambience filed the prospectus on Friday, while BPTP, Sriram Properties will likely file on Wednesday. BPTP, however, denied it was filing DRHP tomorrow. Sahara group’s realty arm Sahara Prime City plans to raise up to Rs 3,450 crore through initial share sale. Mumbai-based Lodha Developers plans to raise Rs 2,700 crore while Delhibased BPTP and Ambience plan to raise Rs 2,000 crore and Rs 1,100 crore, respectively. Kumar Developers and Sriram Properties expect to raise Rs 400 crore and Rs 600 crore, respectively. “We will use the IPO funds to retire high-cost debt, pay for government licence fee for our land and in developing our projects, says Ambience chairman Raj Singh Gehlot. All listed realty companies were quick to tap the QIP route when markets improved because they were the ones who were most leveraged. Now, again they are the ones leading the IPO rush because of the same reason. Besides the need to service huge debt, developers’ internal accruals too haven’t picked up in a big way as homebuyers are only slowly returning to the property market and retail and office segment remains subdued. Some of the developers are also under pressure from private equity funds, which earlier invested in those companies, to go public as it would give funds the exit route. [email protected] --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
