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Lodha Developers has filed its draft red herring prospectus (DRHP) with SEBI. In the papers submitted with the regulator, the Mumbai-based developer said it is looking to sell new shares worth INR3,750 crore (INR37.5 billion), making Lodha Developers IPO one of the biggest public offers in India this year.
The company said it plans to use INR3,300 crore from net IPO proceeds towards reduction of outstanding borrowings. As of 31 January 2018, Lodha Developers had borrowings of INR17,974 crore on consolidated basis.
In addition to the fresh issue, the IPO will involve a sale of 18 million shares by promoters and existing shareholders. The company is nearly fully-owned by Sambhavnath Infrabuild and MPL Trustees. Promoters include Mangal Prabhat Lodha, Abhishek Mangal Prabhat Lodha, Sambhavnath Infrabuild, Farms Private Limited and Mangal Prabhat Lodha Family Discretionary Trust.
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The IPO will be managed by Kotak Mahindra Capital, CLSA India, JM Financial and Morgan Stanley India which are the global co-ordinators for the offer. BOB Capital Markets, Edelweiss Financial Services, HDFC Bank, ICICI Securities, IIFL Holdings, UBS Securities India, and YES Securities have been appointed book running lead managers.
Lodha Developers IPO: Second coming at IPO street
This is the second time Lodha Developers has filed IPO prospectus. In its previous attempt, the company submitted papers to SEBI in September 2009 and received regulatory go-ahead in the next year. However, the company eventually shelved the plans citing poor market conditions. In recent years, it has been studying the market and waiting for better conditions.
This is not an isolated case with Lodha Developers as another realty firm Paranjape Schemes put IPO plans n the backburner after getting regulatory nod in December 2015. Industry peer VBHC Value Homes has deferred its public offer due to poor sentiments while Hindustan Construction Company (HCC)-backed Lavasa has been in abeyance for several years now.
Realty market has been witnessing weak demand in most key markets for a few years now. Nevertheless, Lodha Developers IPO – if successful – may encourage smaller firms to tap the primary market. Bengaluru-based Shriram Properties – which focuses on mid-income housing – is reportedly readying its IPO plans (it has subsequently filed draft prospectus) while Mumbai-based Puranik Builders is also looking to raise funds from primary markets.