India: Godrej Properties Is Said To Look At Raising $300m Via QIP

Godrej Properties Ltd plans to raise around ₹2,100 crore (around $300 million) from its qualified institutional placement (QIP) launched on Tuesday, two people familiar with the development said.

The real estate arm of Godrej Group on Tuesday informed the stock exchanges that the QIP committee of its board met to consider and approve the issue price. In a QIP, a listed company sells equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into stocks, to a qualified institutional buyer.

The company said it has set a floor price of ₹928 for the share sale. On Tuesday, shares of Godrej Properties closed at ₹982 on the BSE, up 2.21%.

The fundraising effort follows the strong mandate for the Bharatiya Janata Party in the recent general election and the interest shown by public market investors towards the real estate sector, especially for developers with large focus on commercial real estate.

So far this calendar year, real estate companies have raised the most capital in the primary market, through a QIP and an IPO.

In March, Blackstone-backed Embassy Office Parks REIT raised ₹4,750 crore through the first IPO of India’s first real estate investment trust (REIT), while DLF raised around ₹3,200 crore through a QIP.

If Godrej Properties raises the money as planned, it will make 2019 one of the best years for real estate fund raising. Last year, Oberoi Realty was the only developer to raise funds through a ₹1,200-crore QIP, while in 2017, Sunteck Realty and Brigade Enterprises raised ₹500 crore each through QIPs.

Godrej Properties plans to use the funds to invest in its subsidiaries and joint ventures; capital expenditure including acquisition of land; working capital requirements and repayment of debt, it said in the exchange filing.

Investment banks Kotak Mahindra Capital, Axis Capital, CLSA and Bank of America Merrill Lynch are managing the share sale.

Godrej Properties is not the only real estate company that is planning to raise funds from public markets.

Puranik Developers and Shriram Properties, which have filed their so-called draft red herring prospectus (DRHP) for their respective initial public offerings, are also planning to soon hit the market.

While Puranik is looking to raise around ₹1,000 crore, Shriram Properties plans to raise around ₹1,200 crore through its IPO. “Both Puranik and Shriram are conducting investor road shows currently and are aiming to launch their respective deals in the coming months, if the market conditions are supportive,” said a third person aware of the companies’ plans.

The Shriram Properties IPO will see several investors including Starwood Capital, Tata Capital Financial Services Ltd, TPG Asia and Mauritius Investors Ltd partially sell their stakes in the company. Additionally, the company plans to raise ₹250 crore in fresh capital.

Meanwhile, Puranik Builders plans to raise ₹810 crore in fresh capital through its IPO, while promoters will sell around 1.85 million shares through the share sale.

This article was first published on livemint.com.