New Delhi: Buoyed by positive market sentiments and demand revival in housing, four real estate companies – Emaar MGF Land, Lodha Developers, Sahara Prime City and Ambience Ltd – are looking to mop-up over Rs 11,000 crore through public offerings.

The four realtors on Tuesday filed their preliminary draft prospectus with market regulator SEBI and, according to industry observers, at least a dozen more realtors may be lining up to tap the capital market in the coming months.

More on bandwagon

In its second attempt at the primary market to raise funds, Emaar MGF is hoping to garner Rs 3,850 crore through its IPO. There will also be an offer-for-sale component of 1.17 crore shares as part of the issue. The amount is substantially lower than what the company had intended to raise in February 2008, when it announced plans for a Rs 7,072-crore public issue. However, it had been forced to withdraw the IPO due to a sudden downturn in market conditions at that time.

Other realtors rushing to jump onto the IPO bandwagon now include Mumbai-based Lodha Developers. It expects to raise Rs 2,500 crore through its public offering to be pumped into the development of its existing land assets. About 20 per cent of the IPO realisation would be utilised for retiring debt, sources said.

Sahara Group’s realty arm, Sahara Prime City Ltd (SPCL), is eyeing an IPO of Rs 3,450 crore including a greenshoe option – the proceeds will be channelled into residential and commercial projects. The company’s business plan is focused on developing 88 integrated townships under the ‘Sahara City Homes’ brand name and 15 residential complexes under the ‘Sahara Grace’ brand across 99 cities in India.

Ambience Ltd – which develops premium commercial and luxury residential complexes in the National Capital Region – has filed a draft prospectus for a Rs 1,294-crore IPO (including a greenshoe option).

“A large portion of the proceeds will be utilised by builders to construct their land holdings. The real estate companies believe that the end-user demand is back for finished products and hence the funds raised would be used largely for delivery of existing projects,” the Jones Lang LaSalle Meghraj Country Head, Anuj Puri, told Business Line.

Analysts feel that this time round the investors would carefully scrutinise the past track record of the realtor in executing projects, the valuation, and the proposed areas for utilisation of funds, before taking an investment call.

Second round

The IPO-filings mark the second round of fund-raising in the real estate industry, which had been wobbling under the impact of a global financial crisis and a resultant lull in sales. However, since March-April this year the tide has started to turn with builders claming an improvement in booking and sales enquiries, especially in the affordable housing space.

As a result, the cash-strapped industry that had shelved projects during the slowdown began leveraging the turnaround in consumer sentiments and went on a fund raising spree. Earlier this year, Unitech, in two tranches, raised nearly Rs 4,320 crore while Indiabulls Real Estate raised Rs 2,656 crore through issue of shares on institutional placement basis. In May, promoters of DLF Ltd offloaded 9.9 per cent stake in the company to institutional investors for Rs 3,860 crore.

“In the last 18 months, the real estate sector has not tapped the IPO market. So clearly there is an investor appetite for public issues in the sector. Now with the stock markets stabilising, another dozen real estate companies are looking to tap the market in the next four months,” said Puri.

Initial public offering

Puri’s comments come at a time when speculations have been rife that developers such as BPTP, Oberoi Constructions, Nitesh Estates and Godrej Properties are finalising plans to raise funds through a public offer in the coming months.

source: Sify Finance

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