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Realtors Sense Stability In Market, Revisit IPO PlansBy ugesh sarkar, Section Finance & Taxes  With the equity market holding up, some of the real estate companies are revisiting their share-offering plans, even at a price lower than what they had initially hoped for. Many of these companies already have Sebi's approval to launch their initial public offerings (IPOs), but deferred their plans in the face of unfavourable market conditions. Companies that have the regulator's approval with a validity until 2011 include Lodha Developers with an indicative IPO size of Rs 2,500 crore, AMR Constructions (Rs 145 crore), Delhibased Ambiance (Rs 1,293 crore), Emaar MGF (Rs 3,850 crore), Oberoi Realty (Rs 1,002 crore), Kumar Urban Development (Rs 320 crore), Prestige Estates (Rs 971 crore), Neptune Developers (Rs 378 crore), and BPTP (Rs 1,500 crore). "The secondary market is witnessing some euphoria, and sectors like telecom and real estate are being rerated," said said a top official at a foreign investment bank involved in one of these deals. "Also, volatility has reduced, which is good for IPO-bound companies. We are likely to see some of the bigger real estate players come back to the market again," he said, but also cautioned that only a few companies would be in a position to take advantage of this window of opportunity. Bankers feel where the issuer and prospective investors differ on the valuation by 5-10%, deals may still get done. Source: Economic Times By Deeptha Rajkumar Realtors Sense Stability In Market, Revisit IPO Plans Click On "Full Story" For More...
"Where there is a huge value disconnect, the deal may not get done," a banker said. At least 50% of the real estate companies will have to get back to their drawing board and refile the prospectus for a small-sized offering, he added.
"There is no denying the sense of optimism in the market, but investors are still not getting the kind of `IPO pop' they used to a few years ago. They have become much more discerning and there is a major change in the mindset, as they focus more on asset quality," says Jagannadham Thunuguntla, equity head of Delhi-based SMC Capitals. According to him, investors are now looking at the track record, visibility of earnings etc. One reason for investors becoming choosy is the overwhelming supply of paper that already exists in the system. "If an investor is keen to hold real estate paper in his portfolio, he has good options in the listed space from a DLF to an Anantraj Industries," remarked the head of investment banking at a foreign broking firm. The pedigree and valuations would have to be really compelling for an investor to take a relook at a new real estate company, he said. Bankers, who have been meeting clients during road shows, say real estate companies will have to benchmark valuations to the secondary market. "There is an underlying sense of bearishness among institutional investors. One should not expect a premium," said a banker. While no company has so far announced its intent to refile for an IPO, bankers are expecting many of them to. It's understood that some of the companies that are still awaiting Sebi approval could also scale down their plans. Real estate companies that have filed their draft red herring prospectuses with Sebi and are awaiting approval are Sahara Prime City (Rs 3,450 crore), Raheja Universal (Rs 864 crore), Embassy Property Developments (Rs 2,400 crore) and Entertainment World Developers (Rs 212 crore).
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