Rahejas plan Rs 1k-cr IPO to fund SEZs

Written by Mona Mehta | Mumbai | Updated: Aug 25 2009, 06:41am hrs
New Delhi-based Raheja Developers is planning an initial public offering (IPO) within this financial year. The company plans to raise above Rs 1,000 crore, as per sources tracking the development. The money will be used to finance the company's projects in two special economic zone projects in Haryana and meet its working capital requirements.

A source in the company, not authorised to speak to the press, said, We are considering a public offer and the proceeds would be utilised to finance new (SEZs), which Raheja Developers is planning to launch, and meet working capital requirements. We are yet to finalise the exact amount of funds to be raised through the IPO. An e-mail sent by the company to FE, however, disclaimed any such plans.

Raheja Developers, an unlisted company, has posted 28% increase in net profit at Rs 32 crore for the financial year ended March 31, as compared to Rs 25 crore reported during the previous corresponding period. The company has registered 18.51% rise in sales turnover at Rs 320 crore for the financial year ended March 31, as compared to Rs 270 crore recorded during the previous corresponding period, said a company source. It claims a 300% growth in revenue in the last three years, but these figures could not be verified.

Listed realty companies have improved their market cap by 7.24% in the past one month (since July 24) as per BSE data. The stocks had suffered a massive correction and dipped by 17.79% in the past one year, but the recent improvements have encouraged the non-listed realty companies to tap the equity markets. Competitor Lodha Group, too, has just started working on the process of coming up with an IPO, said Abhinandan Lodha, director, Lodha Group. According to him, How much funds will be raised will depend on the capital markets. But we will surely raise huge funds for our future projects.

Param Desai, research analyst (real estate) at Angel Broking, said, Like listed realty companies, non-listed realty companies too can raise funds through QIPs. Going the QIP route works for the institutions who have liquidity at their disposal. Instead of doing a market deal, they are able to do a transaction directly with the company. This involves a formal process of interaction with the company and investors are privy to more information. Also, for realty companies it gets faster access to funds unlike in IPO.

Sebi rules say an unlisted company must record profit for three out of the preceding five years to qualify for listing. If it does not, it has to then go in for a book building issue with at least 50% committed subscription by institutional investors.