Lodha plans year-end IPO

Mumbai-based real estate firm Lodha Developers plans a public issue by the year-end to raise between Rs 2,000 and 2,500 crore (Rs 20 to Rs 25 billion), according to sources.

The company is valued at $5 billion (nearly Rs 21,500 crore) and even a 10 per cent dilution could raise Rs 2,150 crore (Rs 21.5 billion), the sources added. The company, which is currently developing 22 million sq ft of land, is planning to use the proceeds from the IPO for its upcoming projects as well as new ones.

When contacted, Abhisheck Lodha, director, Lodha Developers said, "We are planning to come out with an IPO sometime this year. We are in the preliminary stages of appointing the merchant bankers. However, we have not finalised the plan yet."

Earlier, the global investor JP Morgan had invested Rs 274 crore (Rs 2.74 billion) in Lodha Bellissimo, a premium residential building developed by Lodha Builders at Apollo Mills at Mahalaxmi. The company had bought Apollo Mills, a defunct textile unit of the National Textile Corporation two years ago for Rs 180 crore (Rs 1.8 billion).

The Lodha Group is developing residential premises, malls, IT parks and weekend retreats across locations such as Napean Sea Road, Worli Sea Face, Mahalaxmi, Prabhadevi, JVPD, Thane and Kanjurmarg.

The company's upcoming projects include developments at Walkeshwar, Bhandup, Mulund, Dombivili, Dahisar, Thane and Lonavala. Lodha is also expanding to other cities such as Pune, Hyderabad, Chennai and Ahmedabad.

The IPO plans by real estate firms have come under Sebi's increasing scrutiny. The regulatory authority is coming up with stringent land valuation and disclosure norms for realty companies and mandatory IPO grading. Realty scrips have fallen 20 to 30 per cent from their peak in recent months and analysts believe that DLF IPO, the largest IPO till date, could have a positive impact on realty scrips.

Till May 2007, nearly 10 draft offer documents of real estate companies, expected to raise an estimated Rs 19,000 crore (Rs 190 billion) from the market, have been filed with Sebi. According to industry estimates, nearly 27 IPOs from the real estate sector are in the pipeline.