Emaar to try IPO route again

Emaar to try IPO route again
The Economic Times, July 3, 2009, Page 18

In Talks With Kotak Mahindra Capital To Handle IPO Worth Over Rs 4,000 Crore

Abhishek Gupta & Mohit Bhalla ET NOW

EMAAR MGF has taken the first step towards return to the stock markets by opening talks with an investment banker, apparently enthused by the success of its peers in raising cash by privately placing shares to institutional investors, two persons with knowledge of the development said.

ET NOW has learnt that the property developer has started preliminary discussions to appoint Kotak Mahindra Capital to handle its initial public offering (IPO), 18 months after its first attempt failed.

Emaar MGF, a joint venture between MGF Developments and Emaar Properties of Dubai, could be looking to raise at least Rs 4,000 crore although it is not clear how much stake the company will dilute.

An investment banker close to the development said that Emaar MGF executive vice-chairman Shravan Gupta recently met a senior Kotak Mahindra official, to discuss the fund-raising plan. Kotak Mahindra Capital is the investment banking arm of Kotak Mahindra Bank.

“Emaar MGF continues to evaluate various funding options to meet its growth plans. However, we are not in a position to comment on the specifics of any of our fund-raising plans,” a company representative told ET NOW.

A person familiar with the company’s plans said that Emaar MGF’s move has been encouraged by the recent investor interest in real estate companies. DLF, Indiabulls Real Estate, HDIL and Sobha Developers have in recent weeks raised over Rs 8,000 crore through Qualified Institutional Placements of shares.

Their success has also emboldened Shriram Properties, part of the Chennai-headquartered Shriram Group, to appoint Macquarie and Enam Financial Consultants as advisors for a proposed Rs 500-700-crore initial public offering.

The successful IPO last month of Mahindra Holidays, which raised Rs 300 crore, is also being seen as a sign of a revival in the primary market for equities.

The failure of Emaar MGF’s share offering—billed as India’s third-largest after Reliance Power and DLF—in February 2008 marked the beginning of a deep freeze in the IPO market. The property developer was looking to raise Rs 6,400 crore by selling a 10% stake but pulled out after cutting its price twice when only 39% of the issue was subscribed.

The company since then has been on the lookout for funds and was recently bailed out by the Delhi Development Authority, which bought 333 apartments for Rs 700 crore in the 2010 Commonwealth Games Village it is developing. Emaar MGF also got a commitment of receiving $150 million from Emaar Properties last year.