Pune-based real estate developer Paranjape Schemes (Construction) Ltd has filed its documents with securities market regulator Securities & Exchange Board of India (SEBI) to raise Rs 600 crore ($94.5 million) through its initial public offer (IPO).
If it moves ahead with the proposed issue it would become the first pure realty company to do so in five years when Oberoi Realty, Prestige Estates and Nitesh Estates went public. Last year city development and management firm Lavasa Corp had filed for $125 million IPO. Although Lavasa has got approval from the market regulator last November, it is yet to float its issue.
Realty companies have gone back and forth on their IPO plans over the last many years. Shriram Properties, which was scheduled to hit market for IPO this year, has postponed it to next year and is now looking at raising massive round of funding from private equity funds.
Navin Raheja, managing director, Raheja Developers, last year announced that it has already prepared groundwork for an IPO and can go public in a years' time. However, there has been no formal communication on this front as of now.
Even though public issue window has opened up, realty players might face challenges in going public as demand for real estate continues to be slow. Moreover, the performance of several of the listed realty firms post listing has been too poor to provide confidence to investors.
Here's a snapshot for the IPO:
Issue comprises entirely of fresh issue of shares to raise Rs 600 crore.
Bankers: Axis Securities and IDFC Securities.
Use of proceeds:
The company plans to use the proceeds primarily for repayment and prepayment of loans (Rs 185 crore), construction and development of ongoing projects (Rs 186 crore) and investment in its subsidiary MDPL (Rs 162 crore for repayment of loan) and general corporate purposes.
Company:
The company was formed as Paranjape Schemes (Construction) Private Limited in 1987 and later converted into a public company. It is into real estate development with a diversified project portfolio focused on the Pune Metropolitan Region, Mumbai and other cities in western Maharashtra such as Kolhapur, Nashik, Chiplun and Ratnagiri and also in Bengaluru and Vadodara.
The business is run by Shrikant Paranjape and Shashank Paranjape, who have a total of more than 25 years of experience in the real estate industry.
The developments of the company can be broadly classified under residential (townships, redevelopments, affordable, senior citizen homes etc) and non residential (special economic zone, IT park, retail and hospitality projects) segments.
It has so far completed over 160 projects with approximately 15.33 million square feet of developed area comprising of 12.99 million square feet of developed residential area and 2.34 million square feet of developed commercial (i.e. non residential) area.
As of May 31, 2015, completed residential projects constituted 12.99 million square feet of total saleable area, or 84.74 per cent of its completed projects. The company continues to focus on residential projects in the affordable housing segment and the upper-middle class housing segments.
Financials:
The company's revenue from operations declined from Rs 550.85 crore in FY14 to Rs 353.15 crore for the year ended March 31, 2015. In the same period, its net profit almost halved from Rs 26.68 crore to Rs 14.37 crore.
As on May 31, 2015, the total debt on the books of the company stood at Rs 543 crore.
Investors:
Like most realtors the company has attracted PE investors such as Indiareit and Ascendas for specific projects. It had also roped in HDFC's real estate fund as a direct investor in the company in 2007 but had bought back the stake last year.
