Mindspace Business Parks REIT initial public offering (IPO) enters its third and final day today after being subscribed 1.23 times by investors so far.
Mindspace Business Parks REIT initial public offering (IPO) enters its third and final day today after being subscribed 1.23 times by investors so far. The Rs 4,500 crore IPO of the real estate investment trust has managed to attract bids for 8,34,33,000 units against the 6,77,46,400 units on offer. The IPO includes fresh issuance worth Rs 1,000 crore and an offer for sale worth Rs 3,500 crore. Although there are short-term hiccups, analysts say that the Mindspace Business Parks REIT offers long-term value for investors.
The real estate investment trust was subscribed 0.83 times by qualified institutional buyers (QIB). Among QIBs, foreign institutional investors bid for 1.31 crore units while domestic financial institutions like banks and NBFCs bid for 16 lakh units, and mutual funds bid for 36 lakh units. “The enthusiasm shown by some of the large institutional investment firms demonstrates its growth potential in India and as a viable financial vehicle for investors,” said Anurag Mathur, Chief Executive Officer, Savills India an international property consulting ﬁrm. REITs have to pay out at least 90% of their net distributable cash flows to stockholders as dividend.
The majority of the demand came from non-institutional investors that oversubscribed their portion on day two itself. Bids were received for 5.27 crore units against the 3.07 crore on offer. Among these corporate bids were for 95 lakh units while individuals bid for 3.94 crore units. “REITs combine elements of debt and equity and provide a return of ~12-13% of which ~8% is fixed (based on the rental income) and balance accrues through growth in the asset value,” said Sharad Mittal, CEO, Motilal Oswal Real Estate Fund.
Apart from being oversubscribed 0.23 times with still a day to go, Mindspace Business Parks REIT has received Rs 1,518 crore from 54 anchor investors. Some of the marquee anchor investors include the Government of Singapore, Cohen and Steers Global, HSBC, Fidelity, Nomura, Morgan Stanley, SBI Life Insurance, and HDFC Life Insurance. Mindspace Business Parks REIT is the second such issue to enter the stock exchanges after Embassy Office Parts was listed last year.