India: Big investors eye Macrotech Developers share sale

Several global and domestic financial institutions are looking to sign up as anchor investors in Macrotech Developers Ltd’s initial public offering (IPO), multiple people familiar with the development said.

The Mumbai-based firm, formerly called Lodha Developers, launches its 2,500 crore share sale on 7 April.

Canadian alternative investment major Brookfield Asset Management Inc., US-based private investment management firm Wellington Management Co., Abu Dhabi Investment Authority (ADIA), Ivanhoe Cambridge and HDFC Mutual Fund are likely to be among the anchor investors, the people cited above said.

“For a Mumbai-based, residential-focused IPO like Macrotech to generate so much interest from long-term, global investors is surprising and a significant vote of confidence. Given the kind of commitments that are expected to come in from investors, Macrotech could attract a valuation of around 19,000 crore,” the person mentioned above said on condition of anonymity.

Anchor investors are allowed to buy up to 30% of an IPO, and will be invited to buy shares on 6 April, a day before the public share sale opens.

A spokesperson for Macrotech didn’t respond to queries.

This is the third attempt by Macrotech, India’s largest builder by sales, to launch an IPO, after adverse market conditions forced it to delay its plans in 2009 and 2018. The company plans to utilize the net proceeds from the fresh issue towards debt reduction of up to 1,500 crore, acquisition of land or land developmental rights aggregating up to 375 crore and for general corporate purposes.

India’s residential sector, which has seen a slowdown for years now, was further disrupted by the pandemic. However, in recent months, home sales have seen a comeback in large cities, particularly in Mumbai Metropolitan Region, which is Macrotech’s core area of operations.

In contrast, the commercial office sector saw a boom in recent years, and three office real estate investment trust, or Reit, IPOs. Most recently, Brookfield India Real Estate Investment Trust launched its 3,800 crore IPO in February and raised 1,710 crore from 39 anchor investors, including foreign institutional investors, insurance firms and mutual funds. K Raheja Corp. and Blackstone Group Inc.-backed Mindspace Business Parks Reit and Embassy Office Parks Reit launched their IPOs in 2020 and 2019, respectively.

Property analysts believe the Macrotech IPO is crucial in bringing back institutional, overseas investors to the residential sector, which has seen liquidity issues.

“This IPO will send out a big, positive signal and reinforce confidence. It helps that residential sales have been good in the past few months. It will also reinstate that India has the scale and institutional money coming into the housing sector, and that it is fundamentally strong in the long run,” said Anshuman Magazine, chairman and CEO, India, South East Asia, Middle East and Africa, CBRE, a property consultant.

As of 31 December 2020, Macrotech had completed around 77.2 million sq. ft of developable area across 91 projects. It has 54 ongoing and planned projects and focuses significantly on affordable and mid-income housing.

Magazine said the momentum in sales and fresh supply in the affordable housing category, low home loan rates and the improved regulatory regime under RERA would also help attract investors to the housing sector.

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.