Promoters’ holding in top 6 realty cos takes beating

Promoters’ holding in top 6 realty cos takes beating
The Economic Times, August 11, 2009, Page 5

QIP, Stake Sale To Blame; But No Takeover Threat Yet

Sanjeev Choudhary NEW DELHI

PROMOTERS’ equity holding in top six real estate companies fell between 4% and 31% over one year period ended June 30, 2009 on account of stake sale by them, sale of pledged shares by lenders and issue of fresh shares to institutional investors.

Promoters’ stake in country’s second-largest developer Unitech and third-largest firm Indiabulls Real Estate fell significantly to 43% and 16.73%, respectively. But analysts say these companies may not become takeover targets due to the nature of the business.

“Consolidation in Indian real estate sector is likely to happen at project level rather than at company level. A target company can offer brand, relationship and land, but it’s impossible for the acquirer to leverage the relationship as it is individual-driven. So it makes sense for them to go for acquisition of only physical assets,” according to Aashiesh Agarwaal, a real estate analyst with Edelweiss Securities.

Adds another real estate analyst with a Mumbai-based domestic brokerage, who asked not to be named: “In India, most real estate companies have close nexus with politicians, who have their black money invested in these firms. Despite such a deep downturn, no realty firm went bust. The politician-investor will never let a realty company be taken over.”

Unitech promoters saw their holding decline the most —around 31% from 74% a year ago. The promoters lost almost 10% stake in the company as lenders sold shares pledged with them following sharp drop in valuation of the firm in a falling stock market.

Promoter Ramesh Chandra’s stake declined further 21% with the issue of fresh shares in two tranches in April-June quarter to raise $900 million. The share issue was necessitated to repay huge debt that the company had piled on its balance sheet. Unitech’s debt levels had peaked at Rs 10,000 crore, which has now come down to around Rs 7,000 crore.

DLF promoter K P Singh and family also had to sell 9.9% stake in the company to raise funds to pay hedge fund DE Shaw that was looking to exit from DLF Assets (DAL), another company promoted by Mr Singh. Mr Singh raised Rs 3,800 crore through the stake sale. DE Shaw is yet to exit DAL.

Indiabulls Real Estate promoters—Sameer Gehlaut, Saurabh Mittal and Rajiv Rattan—too saw their stake fall by almost 10% to 16.73% following a QIP to raise $565 million in the June quarter. Promoters owned minority stake even before the QIP, but analysts say the company is safe because of higher FII holding, who may not welcome hostile acquirers. FIIs hold 62% stake in the company.

Similarly, country’s fourth-largest developer HDIL’s promoter Wadhawan family’s holding fell around 10% to 51% following $325 million QIP. Promoters’ stake in Bangalore-based Sobha Developers fell from 87% to 65% after the company raised $130 million through share sale to qualified institutional buyers.

Delhi-based Omaxe, which is looking to raise Rs 600-700 crore through QIP, has seen its promoter Rohtas Goel’s stake slide by over 4%, possibly on account of sale of pledged shares by the lenders.

GONE FOR A TOSS

The declining list...
Unitech promoters saw their holding decline to 31% from 74% a year ago.
DLF promoter K P Singh and family also had to sell 9.9% stake in the company
Indiabulls Real Estate promoters—Sameer Gehlaut, Saurabh Mittal and Rajiv Rattan—too saw their stake fall by almost 10% to 16.73% following a QIP HDIL’s promoter Wadhawan family’s holding fell around 10% to 51% following $325-million QIP.
Promoters’ stake in Bangalore-based Sobha Developers fell from 87% to 65% after the company raised $130 million through share sale to qualified institutional buyers.
Delhi-based Omaxe, which is looking to raise Rs 600-700 crore through QIP, has seen its promoter Rohtas Goel’s stake slide by over 4%, possibly on account of sale of pledged shares by the lenders.