India: Shriram Properties reduces IPO size to $103m

Bengaluru, India. Photo by Dinker Gulati on Unsplash.

Shriram Properties Ltd has reduced to 750 crore the size of its proposed initial public offering (IPO), which it plans to launch after the Union budget in February, said a person directly familiar with the plans.

The Bengaluru-based builder, part of the Shriram Group, had received approval from capital markets regulator Securities and Exchange Board of India (Sebi) to float an IPO in April 2018. The developer had planned to raise up to 1,250 crore earlier.

“The expectation from the budget is that it will be housing-friendly, particularly for the mid-income and affordable housing segments, which is what Shriram Properties focuses on. Market sentiment was weak last year but is expected to pick up and be positive after the budget announcement,” said the person mentioned above, asking not to be named.

A Shriram Properties spokesperson chose not to comment.

Shriram Properties, which has projects largely in southern property markets such as Chennai and Bengaluru, has 590 crore of debt, and will mainly use the proceeds of the share sale to pare its leverage level. The developer plans to raise around 250 crore through the primary market and the rest from the secondary market.

The company has already got commitments of around 400 crore from around nine investors, said a second person, who also did not want to be named. Shriram Properties currently has Tata Capital, TPG, Starwood Capital Group and Walton Street Capital as entity-level investors.

Given that the real estate sector has been going through a prolonged slowdown, impacting the residential segment the most, IPOs have largely been out of favour. Mumbai-based Lodha Group, which got Sebi approval for an IPO in July 2018, decided not to launch the share sale last year, till the overall market and real estate sector conditions turned conducive.

In November, Puranik Builders Ltd, which is primarily active in Mumbai and Pune, re-filed the draft prospectus for an IPO. The company is expected to raise around 900 crore through the initial share sale. The share sale, which is a combination of a fresh issue and offer for sale (OFS), will see Puranik raise 810 crore in fresh capital, of which 700 crore will be used to prepay or repay outstanding debt, and the rest for general corporate purposes.

However, real estate investment trusts (REIT) have managed to attract investors, primarily because of the performance of India’s commercial office market. In early 2019, Embassy Office Parks launched the country’s first REIT successfully.

Most recently, Mindspace REIT filed its draft IPO prospectus on 31 December and aims to raise more than 1,000 crore through a fresh issue of shares.

This article was first published on livemint.com

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.