Realty firms opting for IPP route to meet shareholding norms
Real estate firms, including market leader DLF, are taking a contrarian view on preferred route for selling promoter shares, as they are opting for Institutional Placement Programme (IPP) as against the much sought-after Offer For Sale (OFS) mechanism.
With just about three and a half months left to comply with Sebi's guidelines for a minimum public holding of 25 per cent, a host of private sector companies are selling shares and a majority of them have opted for OFS route in this regard.
However, when it comes to real estate companies, they are mostly opting for IPP route, where shares can be sold to only institutional investor. In the OFS route, shares can be sold to institutional as well as retail investors.
Among major real-estate companies, the promoters of Godrej Properties and Prestige Estates Projects have chosen the IPP route to sell their stake. Besides, DLF is expected to go for the IPP route next month to bring their holding below 75 per cent.
The promoters of Puravankara Projects and Oberoi Realty are also said to be looking to take the IPP route to reduce their respective stakes.
IPP and OFS are the two new share sale tools introduced by the regulator in January last year, especially to help corporates increase their public float. More than 30 companies have already sold shares through OFS route, while only three (all real estate firms) have sold shares through IPP mechanism as yet.
Under OFS mechanism, promoters auction their existing shares to bring down their stake in a
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