Bankers court Lodha for Rs 2,500-crore IPO

After four years of dropping its plan to go public, now again Lodha Group, which is country’s largest real estate developer in terms of sales is going to use the idea of launching an initial public offering (IPO) of equity to rise between Rs 2,500 crore and Rs 3,000 crore for the development of the new projects.

As per the reports and bankers¸ the firm is ready with its own proposals from investment bankers to mandate its IPO and it is expected that it would give at least four of the latter. Currently, Lodha Group is building country’s tallest residential building and due to that Lodha Group aims to rise between Rs 2,500 crore and Rs 3,000 crore through IPO source and it is similar which Lodha Group has sought to do in the year 2010. “At pint of time, we have no comment and we do not react to market speculation”, as per statement of the spokesperson of the Lodha Group. According to sources, the buoyancy in the primary market this year and the ‘top realty developer’ tag had prompted Lodha’s IPO plan.

According to reports, the firm promoter is Bharatiya Janata Party legislator Mangal Prabhat Lodha and earlier in the year 2015, it overtook Delhi-based DLF as the country’s largest realtor in revenues, as the sales of Lodha Group was about 7,800 crore for the year 2014-15, whereas; the sales of DLF was about Rs 7,648 crore for the same duration. In current, financial year, Lodha’s sales target is Rs 10,000 crore and deliveries 7,000 units even after the separation from the group of Brother Abhishek Lodha got the flagship real estate business. However; the Abhinandan Lodha¸ the younger sibling set up a financial services company.

It is expected that this new revival the city’s real estate market will help the group as Lodha group predominantly has projects in the Mumbai city as well as its suburbs. According to the reports of property consultant JLL (Jones Lang LaSalle), home sales in Mumbai has risen by more than 28 percent between the fourth quarter of 2014 and the third quarter of 2015. However; it’s true that in past few years only few realty IPOs have come to the market and these years, investment bankers are saying that there is appetite among investors for this big, strong and high-growth firms. Whereas; the 18 firms from as diverse regions, which range from infrastructure to media have come up in the primary market to raise money with the help of IPOs and real estate has stayed away, because it was only Paranjape Schemes Construction which has filed a draft offer document with SEBI (Securities and Exchange Board of India) with an aim to release its IPO.

According to Sharad Mittal, Head and Director of Real estate funds at Motilal Oswal brokerage, “The primary market is not ready for real estate IPOs. The more he added that there are many actual and perceived issues about these companies, which has impacted investor sentiment. However; in under-performance market there are several market leaders who have made it unsuitable for new players which are in planning to come and raise funds through IPOs. “It seems that Indian market is perceived to be hostile for the IPOs of realty companies, however; a big brand such as; Lodha has decent track record  as it is seeing demand from institutional investors, as per the statement of one of the investment banker.

Infrastructure projects worth Rs 37,118 crore

The new BJP government in the state is likely to stoke a fresh lease of life in infrastructure projects worth Rs 37,118 crore across sectors such as highways, ports and shipping and Special Economic Zones (SEZs).

The state will witness major infrastructure projects are getting a push wit the party ruling at the centre too. Indiabulls SEZ is a multi-product SEZ worth Rs 14,650 crore that is being reviewed. The SEZ is spread across 1,011.26 hectares at Sinnar, Nashik. These projects are being monitored from the cabinet secretariat level with the state government, and, now, with the BJP set to assume power in the state, they are likely to get expedited.

“The government is actively considering projects worth Rs 11 lakh crore in all, which will be facilitated soon. By March next year, each ministry will have their own Apps to help track all project applications and processes online,” said Anil Swarup, additional secretary, cabinet secretariat while speaking to a newspaper.

The Maharashtra Industrial Development Corporation has leased out the land for 95 years. The SEZ will have manufacturing industries across sectors such as auto and auto ancillary, pharmaceuticals (formulations), light engineering and electronics, electrical and aviation and ancillary.

Two road and highways projects worth about Rs 12,000 crore are being reviewed by the central government. One of them is the Rs 9,630 crore Mumbai trans harbour link, and, the other, the Rs 2,538-crore L&T East West Tollway project.

The trans-harbour link project envisages the construction of a 22-km sea link, a six- lane road bridge from Sewri on the Mumbai side to Chirle on NH4B in Nhava on the mainland.

It also includes the construction of interchanges at Sewri on the Mumbai side and at Shivaji Nagar and at Chirle on mainland side. L&T East West Tollway is carrying out the four-laning of Amravati- Jalgaon section of the NH 6.

Three port projects, worth Rs 10,300 crore, are also being expedited. The Rs 1,800 crore Alewadi Port, a greenfield container port, is one. The project is expected to create 3,000 jobs during the construction phase and around 1,000 jobs during the operation phase.

The Rs 6,000 crore Rewas Port, being proposed by the Maharashtra Maritime Board, a state government undertaking, has proposed a mega port within the Mumbai harbour region – is the other. The Rs 2,500 crore Vijaydurg Port is the third project.