The regulatory approval for the initial public offering (IPO) of Lavasa Corporation is set to lapse for the second time in four years, as the company awaits revival in the investor appetite for realty companies. Sebi’s approval for IPOs is valid for one year, and will expire on November 6 in the case of Lavasa, according to Sebi data.
A senior investment banker told FE that the company is unlikely to refile the draft red herring prospectus (DRHP) with Sebi anytime soon. “The company wants to wait for two-three years as the IPO is unlikely to get subscribed at the current valuations. Further, Hindustan Construction, which is Lavasa’s parent company, recently raised money through institutional private placement, and it is unlikely to raise any further money as of now,” the investment banker told FE on conditions of anonymity.
An email query sent to the company failed to elicit any response till the time of going to press.
Lavasa had initially filed its DRHP in September 2010 to raise close to Rs 2,000 crore, for which it received the Sebi approval in November 2010. However, adverse market conditions forced the company to shelve its IPO plans. The Ajit Gulabchand-led company filed its DRHP for the second time in July 2014 to raise Rs 750 crore, and received the nod in November 7, 2014.
As per Sebi’s regulations on issue of capital and disclosure requirements, a company gets one year to hit the primary market after receiving regulatory clearance. If a company fails to do so in the said period, it needs to refile the prospectus with the regulator for fresh approval.
As of November 3, there are 16 companies, including Infibeam, AGS Transact Technologies, Alkem Lab and Nuziveedu Seeds, which have valid Sebi approvals to launch their IPOs, Prime data showed. The total estimated issue amount of these 16 companies is more than Rs 9,000 crore. In addition, 18 companies have filed their draft prospectus with Sebi and awaiting the nod.
Data shows that state-owned Rashtriya Ispat Nigam may also see its Sebi approval lapse for the second time. The approval the Visakhapatnam-based steel company received from Sebi for Rs 1,500-crore issue will cease on December 22, 2015. RINL had failed to tap primary markets after filing its prospectus with Sebi in May 2012.