Real estate firms make a beeline for IPOs

A whole host of real estate companies approached market regulator SEBI to file the draft red herring prospectus (DRHP) for their proposed initial public offerings (IPOs). The total amount proposed to be raised from these issues comes to around Rs145-150bn. Three other real estate companies - Lodha Developers, Sahara Prime City and Emaar MGF - each filed a DRHP with SEBI, in order to raise a total Rs100bn from the primary markets.

Mumbai-based DB Realty aims to raise Rs15bn by selling a 10% stake through the IPO. The issue will have a greenshoe option of Rs1.5bn. Kumar Builders plans to mop up Rs4-5bn. Last Friday, Delhi-based Ambience Ltd. had filed a DRHP with SEBI to raise as much as Rs11.25bn through an IPO with a green-shoe option of Rs1.69bn. BPTP and Sriram Properties too reportedly likely file DRHPs this week, though BPTP denied having done so.

A clutch of other developers, including Oberoi Constructions, Nitesh Estates and Godrej Properties, have said they are working on plans to launch IPOs in the next few months. Since April, founders of the country's biggest property firm DLF have raised US$780mn, second-largest Unitech has raised US$325mn and Indiabulls Real Estate has raised US$550mn through sale of shares to institutions.

Indian companies have raised about US$15bn through share sales in the past six months, encouraged by a sharp rebound in the local stock market that has risen 75% so far in 2009. The real estate sector index has nearly doubled this year after plummeting by more than 80% last year.