Private property developers such as Godrej Properties and Lodha Developers may tap capital markets in the next three-four months to raise funds for their ventures, according to investment banking sources.
Godrej Properties, part of the Godrej group, may float an initial public offer of about Rs 500 crore (Rs 5 billion) in the next three months, said a banker close to the development. The company plans to sell 9.4 million equity shares in the IPO, which will constitute 13.5 per cent paid up capital of the company, the draft red herring prospectus filed by it showed.
The company also plans a pre-IPO placement of 2.4 million shares with investors, the company said.
Though the company had filed a DRHP with the Securities and Exchange Board of India in June 2008, it had postponed the IPO due to adverse market conditions.
Godrej Properties recently got a nod from Sebi for the IPO, which has a window of 12 months. However, the company wants to hit the market at the earliest, sources said.
Asked, a Godrej Properties official declined to comment on the IPO. Its proceeds are expected to be used for buying land and construction activities, sources said. ICICI Securities and Kotak Mahindra are bankers for the issue.
Another Mumbai-based developer, Lodha Developers, is also looking at an IPO of Rs 2,000 crore (Rs 20 billion) by the year end and plans to a file a DRHP soon, a television channel reported on Wednesday. But when asked, Abhisheck Lodha, director of Lodha Developers, declined to comment.
"Lodha's IPO plans are in the preliminary stages and nothing has been finalised yet. Apart from IPO, there are various ways of raising funds. We will take a call soon,'' said a banker involved in the fund raising process.
According to consultants, the succesful qualified institutional placements of property developers in the recent past and requirements of equity capital are prompting developers to go for an IPO.
"The QIPs of real estate companies have been accepted very well by the market. Most of the real estate companies are in need of equity capital, as they are highly leveraged. They need to get equity capital to lower their leverage positions,'' said Ambar Maheshwari, director, investments, DTZ, an international property consultant.
Real estate companies such as Unitech, Indiabulls Real Estate, HDIL and Sobha Developers raised over Rs 7,500 crore (Rs 75 billion) this year by selling shares to investors through QIPs.
"Real estate companies planning an IPO should have a flexible strategies in terms of launches, products and pricing to tackle the uncertain times in the property market,'' said Maheswari.
