Sobha looking to sell stake

Sobha looking to sell stake
The Economic Times, March 4, 2009, Page 7

J Padmapriya, BANGALORE

PROMOTERS of Sobha Developers, a Bangalore-based realty major, are hoping to raise Rs 600 crore this year through sale of up to 26% stake or by unlocking value from the company’s land bank.

The company has already identified land parcels, amounting to 400 acres, across Bangalore, Chennai, Kerala, Hyderabad and Pune for divestment. Some of these land parcels in Bangalore are in Minerva Mill, Bangalore East and Thanisandra. Sobha’s total land bank assets are in the region of 3,000 acres.

“We are open to all options including raising equity at the entity level,” Sobha managing director JC Sharma told ET. Sobha has been talking to a host of big private equity funds for stake dilution.

The company may be looking at deploying these funds in its ongoing projects. Sobha, a residential segment leader in Bangalore, has nearly 1,400 apartment units under development which are scheduled to be ready in two to three years.

Also, in a deviation from its model of selling constructed apartments and villas, Sobha has entered the business of selling plots of land. It is looking at selling 15 acres as large-sized plotted development in Bangalore’s Thanisandra area. These plots carry an approximate tag of Rs 3,000 per sq ft.

Realty trackers say, companies may look at monetising their land banks by selling them off as plots. “It is difficult to offload a large parcel of land in the current scenario. So, carving such a parcel into several plots is more doable. Besides, companies do not have to incur construction costs and a long gestation period,” a consultant says. A year ago, valuations of realty companies soared based on their land bank assets. Today, with falling realty prices and negative buying sentiments, many realtors are looking at unconventional options to meet liquidity requirements.