Shri­ram Prop­er­ties plan­ning Rs1,000 cr IPO

HT Estates - - FRONT PAGE - Mad­hurima Nandy mad­hurima.n@livemint.com

BEN­GALURU: Real es­tate firm Shri­ram Prop­er­ties Pvt. Ltd plans to raise around Rs1,000 crore from an ini­tial pub­lic of­fer­ing (IPO) and en­ter the low-cost hous­ing seg­ment with homes in the Rs15-25 lakh price range, said a top ex­ec­u­tive.

“As an or­ga­ni­za­tion, we are IPO-ready. We­hada­good2017-18 and are putting the house in or­der and pre­par­ing our­selves for an even bet­ter year. We will be re­al­is­tic about the IPO, but we know this is the best time be­cause the men have been sep­a­rated from the boys in real es­tate; an­dif it’s agood­com­pany, it should do well,” man­ag­ing di­rec­tor M. Mu­rali said in an in­ter­view.

In 2017-18, a tough year for most devel­op­ers, Shri­ram Prop­er­ties sold 1,204 homes in Ben­galuru, its core mar­ket, and 555 in Chen­nai.

In 2018-19, it ex­pects to sell al­most dou­ble the num­ber of units.

Shri­ram Prop­er­ties has four large in­vestors at the com­pany level—Wal­ton Street Cap­i­tal LLC, Star­wood Cap­i­tal Group, Tata Cap­i­tal Ltd and TPG Cap­i­tal.

The Shri­ram Prop­er­ties IPO would gen­er­ate liq­uid­ity for these in­vestors as well as po­ten­tial ex­its.

Mum­bai’s Lodha Group, which is ex­pected to file for an IPO soon, will be a de­ter­min­ing fac­tor. If it fares well, it will be a huge con­fi­dence booster for the realty sec­tor, said an­a­lysts.

“If there is an­other IPO that pre­cedes ours and if it’s suc­cess­ful, it will cre­ate in­ter­est among in­vestors,” Mu­rali said.

This year, Shri­ram Prop­er­ties, which has a mid-in­come hous­ing port­fo­lio, plans to en­ter the low- in­come group ( LIG) hous­ing space and has a pipe­line of projects of 6-7 mil­lion sq. ft across cities, with homes in the Rs15-25 lakh bracket. All these projects will en­joy tax in­cen­tives and other ben­e­fits un­der the Prad­han Mantri Awas Yo­jana (PMAY).

“There is a huge op­por­tu­nity to­day which is un­der­served be­cause not many or­ga­nized devel­op­ers are pre­sent in this seg­ment de­spite huge de­mand. If we are able to con­trol costs, we will be able to crack this seg­ment. There is in­vestor in­ter­est in LIG hous­ing...some of them have been ask­ing if we can do projects in mar­kets where we aren’t pre­sent,” Mu­rali said.

The firm is ex­plor­ing projects in the sub-Rs 15 lakh cat­e­gory as well, but dis­cus­sions are at an early stage, he added.

Over the last year, Shri­ram Prop­er­ties has raised sig­nif­i­cant cap­i­tal from both do­mes­tic and for­eign in­vestors.

Ear­lier this year, it raised around Rs1,000 crore from ASK Group­toin­vest in af­ford­able and mid-in­come hous­ing projects.

In 2017, The Xan­der Group Inc. and Dutch pen­sion fund as­set man­ager APG As­set Man­age­ment NV bought an in­for­ma­tion tech­nol­ogy (IT) spe­cial eco­nomic zone (SEZ) in south Chen­nai for around $350 mil­lion from a joint ven­ture of Shri­ram Prop­er­ties and SUN-AREA Prop­erty Part­ners.

The last time real es­tate firms hit the pri­mary mar­ket was in 2010.

Pune- based Paran­jape Schemes­filed for anIPOwith­the Se­cu­ri­ties and Ex­change Board of In­dia (Sebi) in July, 2015 and the pro­posal was cleared in De­cem­ber, but even­tu­ally the com­pany didn’t go ahead with it.

Since then, realty firms have brought in­sti­tu­tional in­vestors on board in joint ven­tures or through stake sales.

“Broadly, for real es­tate IPOs to­day, any com­pany with heavy res­i­den­tial fo­cus may find it tough given what the sec­tor has un­der­gone in re­cent years. Re­tail in­vestors would be driven by per­cep­tion which may not be pos­i­tive cur­rently though in­sti­tu­tional in­vestors, who typ­i­cally take a long-term view would eval­u­ate a com­pany’s man­age­ment struc­ture, track record, large on­go­ing projects etc,” said Chin­tan Pa­tel, part­ner, deal ad­vi­sory-real es­tate and hos­pi­tal­ity, KPMG.

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