Oberoi Realty looks to raise funds via QIP

Mumbai: Real estate developer Oberoi Realty Ltd is planning to raise funds from institutional investors through a qualified institutional placement (QIP), said three people aware of the development.

QIP is a capital-raising tool through which listed companies can sell shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into stocks, to a qualified institutional buyer.

Oberoi Realty is one of Mumbai’s largest real estate developers and has developed over 40 projects across the city, aggregating about 11.30 million sq. ft.

The company has an additional 28 million sq. ft. under development.

“Oberoi Realty has appointed investment banks JM Financial and Morgan Stanley to help it raise capital through a QIP offering. The company has been in talks with investors lately and is expected to launch the offering soon, within the next few weeks, if the stock markets are supportive,” said one of the people cited above, requesting anonymity as he is not authorized to speak to reporters.

According to a second person cited above, the company plans to raise up to ₹2,000 crore. On 5 June, at its annual general meeting, shareholders of Oberoi Realty approved a resolution to allow the company to raise as much as ₹2,000 crore through various routes, including a QIP.

“The capital is likely to be used for debt repayment and investment in ongoing projects,” he added. He too requested anonymity.

A spokesperson for Oberoi Realty said the company doesn’t comment on market speculation.

Morgan Stanley declined to comment. An email sent to JM Financial did not elicit any response.

Oberoi Realty reported a revenue of ₹1,292 crore in 2017-18, compared to ₹1,161.35 crore a year ago.

It reported a profit of ₹458.8 crore in 2017-18, against a profit of ₹378.59 crore in the previous year.

The company is currently developing residential real estate projects with a total area of 13.65 million sq. ft, of which 5.6 million sq. ft has been sold till date, its filings show.

The residential projects being built by the company include Prisma, Sky City and Esquire in the western Mumbai suburbs of Andheri, Borivali and Goregaon, respectively. The company is also developing a residential and hotel project in upmarket locality of Worli in central Mumbai called Three Sixty West.

Apart from residential projects, Oberoi Realty has also built a mall and a hospitality project The Westin Mumbai, besides a couple of commercial properties in the same suburb.

Few real estate companies have tapped the public markets in the recent years to raise capital, though activity is likely to be higher this year.

In April, another Mumbai-based developer Lodha Developers Ltd filed the draft red herring prospectus for its initial public offering (IPO), which will see the company raise over ₹5,000 crore.

Bengaluru-based developer Shriram Properties Pvt. Ltd also plans to raise around ₹1,000 crore from an IPO, managing director M. Murali told Mint in April. Another Mumbai-based developer, Puranik Builders Pvt. Ltd, has started work on its initial share sale, Mint reported on 29 January.

Last year, just two real estate developers—Brigade Enterprises Ltd and Sunteck Realty Ltd—raised capital through the QIP route. The two companies collectively raised ₹1,150 crore from institutional investors.livemint