Delhi-based realty firm Emaar-MGF has put its listing plans on hold. Although the company has filed its prospectus with market regulator Sebi for an initial public offering (IPO) to raise around Rs 3,850 crore, it has kept the plan in abeyance for the time being. The company apprehends that it might not be able to mop up the proposed amount because of the Dubai crisis and recent raids by the enforcement directorate (ED) at its various premises, a person with direct knowledge of the development said.
The company did not respond to an e-mail query by FE sent about a week ago. Although Emaar-MGF had played down the impact of the Dubai crisis on Indian ventures, the development has left the realty major of the West Asia bruised with a rating downgrade.
Last week, following the raids conducted by the ED, the company issued a statement saying it was a routine one, in which it truly cooperated with the official operations.
Although on both the occasions–the Dubai crisis and the ED raids–the company maintained that its IPO plans would be well on track, it has now felt the need to put the proposed listing on hold after deliberating on the issue with investment bankers as well as internally.
The ED last week claimed to have found evidence of ‘large-scale’ violations of the foreign direct investment (FDI) guidelines by real estate major Emaar MGF in purchase of land. During its searches carried out at 13 premises of the group on last Thursday, the ED also claimed to have recovered about Rs 9 crore in cash, 2 kg of gold and foreign currency worth Rs 5 lakh. Stating that Emaar MGF had availed itself of more than Rs 6,000 crore of FDI in the last four years, the ED said in a press statement that the seized documents indicated “large-scale violations in FDI guidelines.”
The company has about 12,800 acre of land bank, out of which 8,700 acre is agriculture land. ?Most of this farmland has been acquired through FDI, which is a violation,? the statement said. The ED claimed that the MD of the group ?admitted that the FDI funds were used for purchasing agricultural land?.
The firm, a four-year-old JV between Emaar and Indian real estate company MGF, had withdrawn its plan for a public listing last year after markets tanked following the global financial meltdown. Buoyed by the recovery, it revived its IPO plan and filed a fresh prospectus with the Sebi in September.