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Oberoi has hired investment banking major Morgan Stanley to value the company. The developer plans to issue fresh shares under the IPO, however, the exact dilution of the stake is not known.
The company plans to use the IPO proceeds for land acquisition and fund upcoming projects including the Oberoi Garden City and four and five-star hotels across the country.
"We have executed many major projects in Mumbai and have a good land parcel in the heart of the city. We will not go for pre-IPO placement of shares,'' said Vikki Oberoi, managing director of Oberoi Constructions.
The company has a land bank of 130 acres mainly in the western suburbs of Mumbai. It has eight residential, commercial and retail projects under construction with a development potential of 21 million sq ft, he said.
On volatility in the stock market and hammering of realty stocks, Oberoi said, "Stock markets will distinguish between the performers and non-performers. We are confident of a good issue,'' he said.
The company is building Oberoi Garden City, an 80 acre composite realty project including office complexes, malls, schools and residential townships with expected revenues of Rs 8,000 crore (Rs 80 billion).
The company has plans to build such projects in all the major cities including Chennai, Bangalore and Hyderabad among others.
These projects will be spread over 80-100 acres. Based on land prices in different cities, these projects have a land acquisition cost of Rs 400 crore (Rs 4 billion) to Rs 500 crore (Rs 5 billion) and a construction cost of nearly Rs 2,000 crore (Rs 20 billion).
"We are expecting revenues of Rs 4,000 crore from these projects in three years,'' said Oberoi. The company has also placed a Rs 2,000 crore order with construction major L&T for executing its realty projects.
Oberoi has tied up with Westin Hotels and Resorts of global hospitality major Starwood Hotels for its five-star hotel at Oberoi Commerz in Mumbai.
The company has acquired land for four more hotels in Mumbai and Pune. It is also scouting for properties wherever the company is building Garden City projects. The company will have five hotels, in the four-star and five-star categories, in the next five years, he said.
"Our first hotel will open by 2009 beginning. We have plans to open one hotel every year for the next five years. Starwood will be a preferred partner for our hospitality venture,'' Oberoi said.
Apart from the IPO proceeds, the company is planning to use internal accruals for the development of upcoming properties.
Oberoi said the company would also go for infrastructure projects if they contain real estate element.
