Mumbai: In the last two weeks, five real estate companies have filed prospectus with Sebi for going public, while another 4-5 are expected to follow suit. Together these 9-10 realty firms are expected to raise over Rs 15,000 crore from investors through the IPO route. While merchant bankers are gung-ho about the prospects of upcoming offers, institutional dealers with large foreign and domestic fund managers are not so sure investors have the appetite for such a large dose of realty stocks within a short span of time. In addition, they are also keeping their fingers crossed, hoping merchant bankers can, all of a sudden, service properly all the IPOs that include offers from non-realty companies as well.
The not-so-credible performance of realty firms that had gone public in the last few years could also weigh on investor sentiment, forcing merchant bankers to settle for a price that could be attractive to investors but not so much to the management of the companies going public. This rush to file IPO prospectus was prompted by Sebi’s rule that the document should include audited financial results till the preceding six months. All these realty offers are coming on the heels of a series of institutional placements by some of the large realty firms that include Unitech, Indiabulls Real Estate, HDIL, Sobha Developers and Orbit Corp, and also a sizeable sell-off by DLF promoters. Together these placements have already taken out about Rs 10,000 crore from the market. “The overhand of realty papers is a concern for the market. I’m not very sure all the IPOs in the pipeline would get good response from the institutional fund managers,’’ said head of institutional broking at a domestic broking house. While merchant bankers and realty firms are trying to mobilise investor money on the back of the recent market rally that saw the BSE sensex more than double in value in about six months, most leading fund managers feel Indian shares are expensive at current levels and a correction is due. In case a host of IPOs hit the market at the same time, it could suck out money from investors within a short span of time, leading to a correction, dealers cautioned. The past performance of realty firms could also weigh on realty IPOs in the pipeline, market analysts said. About 10 real estate firms had gone public in the last three years, but despite doubling and trebling of stock prices of these shares, only one is still in the money. In the rest, investors have lost money. Brokers and dealers feel all types of investors—institutional, high networth and retail—will now be very careful before putting money in real estate firms. Successful completion of all these issues could double the market capitalisation of the real estate sector. As most of the IPOs are expected to dilute about 10-12% of the company’s equity capital, listing of these firms can add about Rs 1.5 lakh crore to the combined market cap listed realty firms which is Rs 1.6 lakh crore now, the institutional broking head pointed out. --~--~---------~--~----~------------~-------~--~----~ 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 -~----------~----~----~----~------~----~------~--~---
