Indiabulls QIP sold in a day
The Economic Times, May 20, 2009, Page 17
Our Bureau MUMBAI
INDIABULLS Real Estate is learnt to have sold its $600-million qualified institutional placement (QIP) in a day. Sources close to the issue said the country’s third largest developer had received total applications worth $2 billion from private equity and hedge funds including Farallon, TPG Capital, Och Zoff, Moon Capital and Fidelity. It is also learnt that the company has placed the QIP at Rs 185 per share, slightly lower than the ruling market price of the stock. The Indiabulls stock closed at 199.75 on Tuesday.
When contacted, Indiabulls CEO Gagan Banga said: “I can only say that the book has been closed. I would not be able to share the details of the issue at this point of time.”
Indiabulls announced its plans to raise funds through QIP on Monday. It was the first instance of an equity issue which was aimed at riding the improved sentiment in the stock markets, post general elections. The issue opened on Tuesday. Morgan Stanley is the advisor to the issue. Indiabulls is expected to announce the details of the issue by this week.
Domestic realty players are going through tough times due to liquidity problems as well as shortage of fresh demand. New projects were put on the backburner for some time while many of those under construction are delayed. Though this situation, say industry experts, may improve following the performance of BSE during past two days. Last week the India’s largest listed developer, DLF raised $783 million through a share sale. DLF is also looking at selling some of its land parcels.
Another realty major Unitech had raised $325 million through a QIP last month. It is believed the QIP proceeds were used to bring down the company’s debt of Rs 8,900 crore. Unitech sold shares through the issue at a 11% discount to the stock’s last closing rate. However, market sentiments have dramatically improved since the Unitech issue.
Wednesday, May 20, 2009
Indiabulls QIP sold in a day
DLF, Unitech aim to lower debt burden
DLF, Unitech aim to lower debt burden
The Hindu Business Line, May 20, 2009, Page 1
Moumita Bakshi Chatterjee, New Delhi
Real estate major DLF aims to nearly halve its current debt position of Rs 14,000-15,000 crore by the end of the financial year, and its rival Unitech wants to lower borrowings to Rs 6,000-6,500 crore from the existing Rs 7,800 crore.
Market analysts said that although the two companies have outlined aggressive plans to lower their debt obligation, achieving the target could take more time. “The companies are going for asset sale or sale of non-core businesses and that cannot be done overnight. The intention is correct but it may take time,” said a Mumbai-based analyst.
Market observers also felt that while the residential market appears to be showing some signs of improvement, it may be too early to raise a toast.
De-leveraging path
In an investor presentation circulated last evening, Unitech said that its operational strategy (improved operational cash flow, monetisation of non-core assets and debt management) along with recent fund-raising activity (QIP issue) had resulted in a “comfortable liquidity position”, but that debt levels were “still high”.
“De-leveraging will remain a focus area to reduce the interest expense, and utilise the saved cash for project development,” it said.
Unitech claimed that it has sold projects worth Rs 850 crore between April 1 and May 15.
The company is looking to prune debt to Rs 6,000-6,500 crore during FY10. Its debt stood at Rs 10,900 crore in December 2008 but subsequently dropped to Rs 8,400 crore after the Unitech-Telenor deal saw Rs 2,000 crore of telecom debt being transferred to Unitech Wireless’ balance sheet.
Asset sale
Unitech’s target for lowering the debt largely hinges on asset sales (commercial property in Saket, sale of hotels, school and hospital plots). It hopes to reduce the debt to Rs 4,500-5,000 crore by the first half of FY2011.
The promoters of DLF recently raised Rs 3,860 crore by selling their stake to institutional investors. Of this, nearly Rs 1,800 crore is likely to be injected into the privately-held DLF Assets Ltd which, in turn, will use the proceeds to pay DLF on “contractual obligations”.
“The Group would also raise money through sale of non-core assets such as the wind power business, and it has also put hotel sites on the block,” a senior DLF official said.
The official indicated that the Group may realise Rs 1,000-1,200 crore from the wind power business. “Similarly, the sale of our holding in Hindustan Spinning Mills site could fetch another Rs 400 crore,” the source said citing certain instances of asset sales.
Unitech promoters to infuse Rs 1,000 crore
Unitech promoters to infuse Rs 1,000 crore
Business Standard, May 20, 2009, Page 6
BS Reporter / Mumbai
Also divesting stake in its non-core assets such as hotels.
Unitech Ltd, the country’s second-biggest real estate developer, has announced the approval of a plan by its board to raise additional long-term funds by selling securities and issuing convertible warrants to its promoters.
This was communicated by the company in a statement to the BSE.
A source involved with the development said the promoters will invest as much as Rs 1,000 crore through subscription of the warrants, of which Rs 275 crore will be brought in by June.
After conversion of the warrants, the promoters’ stake is expected to go up by 10 per cent to 61 per cent.
“The subscription to the convertible warrants emphasises the confidence of the promoters in the company,” a company official said on condition of anonymity.
The additional infusion of capital is expected to help the company in reducing its debt to equity ratio considerably. The realtor has about Rs 8,400 crore of debt on its books.
The move to infuse additional capital into the company comes after Unitech offloaded some stake worth $325 million last month to select investors in order to tide over tight liquidity.
The promoters’ stake had fallen to 51 per cent after issue of new shares to overseas investors.
The promoters of Unitech are expected to liquidate their investment in other ventures to bring in the additional capital, the source said.
Indian realtors are facing a severe cash crunch as sales of offices, homes and shops have tumbled, owing to the economic slowdown.
In an attempt to boost cash flows, Unitech and other developers are now focusing on launching affordable housing projects, which have received a good response from buyers in the past couple of months.
Unitech is also divesting stake in its non-core assets, such as hotels and land parcels meant for other purposes. The New Delhi-based real estate developer has already raised Rs 231 crore from sale of a hotel in Gurgaon.
The company plans to sell four of its hotel projects, including in Noida, Kolkata and Gurgaon, as part of its asset sale plan and will also bring in private equity at project level.
Besides, the company has decided not to acquire land in the near future, except for extremely attractive opportunities.
Unitech to raise funds via securities
Unitech to raise funds via securities
The Times of India, May 20, 2009, Page 25
Amrita Nair-Ghaswalla TNN, Mumbai
Real estate majors, hit by a severe cash crunch after high prices kept buyers of homes, offices and shops away, are in a frenzy to raise money. On Tuesday, cash-strapped builder Unitech received the approval of its board to raise additional long term funds by issuing securities.
On Monday, Indiabulls Real Estate raised $550 million by selling shares, while last month, the country's largest realty giant, DLF, raised $783 million by selling promoters' stake. In a bid to lessen its debt levels, the Bangalore-based realty developer Sobha Developers is also set to raise long term capital during the current fiscal (FY10).
Unitech's board has also agreed to raise funds by issuing warrants to the promoters, an official said. Last month too, Unitech had raised $325 million through a QIP (qualified institutional placement) ‘‘to part retire its Rs 8,900 crore debt and strengthen its balance sheet. The promoter holding in the company had fallen to 51% from 64%, post the QIP'', the official added.
‘‘The global credit crunch has adversely impacted the realty segment, leading to delay in under-construction projects and postponement of new projects,'' an analyst tracking the sector said. ‘‘This has ensured that most firms are in talks to sell prime properties,'' the analyst with Angel Broking added.
Unitech also plans to generate Rs 900 crore from the sale of two hotels in Gurgaon and a commercial office complex in Saket, New Delhi, by the end of June. The company plans to generate Rs 1,600 crore by selling assets, including plots and residential projects, by the end of the current fiscal.
In April '09, the company raised Rs 1,625 crore from share sale to select investors, as part of a plan to repay debt and invest in affordable housing projects. The company allotted 42 crore equity shares of Rs 2 each at a price of Rs 38.50 per share to 55 QIP allottees, the official added.
While DLF promoters recently sold a 9.9% stake to raise Rs 3,860 crore, the company also plans to raise Rs 10,000 crore in the next 2-3 months by selling some of its real estate projects.
Sources said Bangalore-based Shobha Developers is in the process of disposing land where projects cannot be launched in the near future.
Tata Capital Housing Finance NHB nod to open shop
Tata Capital Housing Finance NHB nod to open shop
Business Standard, May 20, 2009, Section II, Page 2
BS Reporter / Mumbai
Tata Capital Housing Finance Limited (TCHFL), a wholly-owned subsidiary of Tata Capital, has been registered with the National Housing Bank as a housing finance company (HFC) and is now permitted to commence business.
Incorporated with an authorised capital of Rs 100 crore of which Rs 10 crore has already been subscribed, the firm will focus on Tier I and Tier II cities. It plans to establish 35 outlets by the end of FY10.
Tata Capital already has a presence in retail finance with a products suite comprising auto loans, personal loans and property. The size of its asset portfolio is Rs 8,000 crore, which is equally divided between retail and corporate loans. “A separate subsidiary will help us consolidate and focus on our housing finance business. We intend to leverage the Tata name and the Tata Capital brand,” said Praveen Kadle, managing director, Tata Capital.
The firm will sanction loans between Rs 2 lakh and Rs 2 crore for up to 85 per cent of a property’s value. The maximum duration of loan repayment will be 240 months while the minimum will be 12 months. The firm hopes to disburse a minimum of Rs 200-400 crore worth of loans in the first year of operations and intends to match industry benchmarks in terms of interest rates.
When asked if firm was looking to grow through acquisitions, Kadle replied, “We will look at inorganic growth only if valuations make sense. The condition of the balance sheet of the HFC up for sale will also be a factor.” Kadle added the firm has not finalised any deals with Tata Housing, the property development of the Tata group. Tata Housing recently unveiled plans to develop apartments priced below Rs 4 lakh for the low-income segment at Boisar, 100 km from Mumbai.
Spurt in REITs may signal revival of realty sector
Spurt in REITs may signal revival of realty sector
The Economic Times, May 20, 2009, Page 17
Supriya Verma Mishra ET INTELLIGENCE GROUP
THEmarked improvement in performance of Real Estate Investment Trusts (REITs) in recent months, including those set up by Indian developers, is being seen as a pointer to an imminent revival in the property market.
Indian property developers’ overseas-listed REITs such as Ascendas, Hirco, Unitech Corporate Park and Ishaan have nearly doubled in value from a year ago even as the FTSE Global Real Estate Indices for Asia, Europe and US have appreciated by 50% since March 2009.
The improved market conditions could also pave the way for the REIT listings of DLF and Unitech, which have been put on hold.
REITs are entities that that own and manage a portfolio of real estate properties. Anyone can invest in a publicly traded REIT, which is seen providing the advantages of liquidity and diversity because it invests in a portfolio of properties.
REITs are currently not allowed in India but the Securities and Exchange Board of India has rules for its implementation. Globally, about $8.7 billion has been raised through REITs in the past few months.
“With a stable government there has been a positive view on the Indian economy in the international market. Residential property will predominate this upturn,” says Hirco Chairman Niranjan Hiranandani.
As stock prices typically discount future events, the upturn in the REIT market can be attributed to an imminent revival in the residential real estate space in the near term. Investment in REITs is becoming increasingly attractive as property prices have declined 30-50% from their peak. This provides the potential for investors to make attractive long-term capital gains while enjoying rental yields in the interim, particularly at a time when interest rates are at historic lows in most countries.
Punj Lloyd to exit realty business
The Economic Times, May 20, 2009, Page 5
Engineering & Construction Firm To End JV With NCR-Based Ramprastha Group
Our Bureau NEW DELHI
ENGINEERING and construction company Punj Lloyd is exiting real estate business by ending its two-year-old joint venture with NCR-based realty firm Ramprastha group. Ramprastha group will buy Punj Lloyd’s 50% stake in the joint venture company that was supposed to develop 29-acre residential project in Ghaziabad.
“We are no more interested in being a developer. Ramprastha will buy our stake and a deal is being worked out,” Punj Lloyd chairman Atul Punj said, adding that a bad real estate environment had prompted this decision. Punj Lloyd was supposed to do the entire construction for the Ghaziabad housing project.
Mr Punj said his company will continue to take housing construction orders, but had abandoned its ambition to become a developer. The company is executing some state-promoted housing projects in the Middle East.
On the possibility that a stable UPA government will mean more infrastructure projects and thus more business from India for the company, Mr Punj sounded sceptical: “It will depend on how fast the government moves on the infrastructure projects. Allocation has never been a problem in India, but the implementation has been.” India’s share in Punj Lloyd’s total revenue today stands at 20%.
The company today has a order backlog of $4 billion. It has increased its average ticket size of orders from $25 million three years ago to $225 million now. “We are targeting an average order ticket size of $500 million now,” Mr Punj said.
Loss in FY09 due to SABIC case: Atul Punj
New Delhi: Engineering firm Punj Llyod on Tuesday said it had reported a loss of Rs 253 crore in the just concluded quarter due to the negative impact of around Rs 220 crore incurred on a litigation between UKbased subsidiary Simon Carves and SABIC Petrochemicals. “There was a unplanned and unexpected negative impact due to a litigation with SABIC Petrochemical and our subsidiary Simon Carves. We just opted to write it off and stop speculation once for all,” said Punj Llyod chairman Atul Punj while addressing a press conference. — PTI
Sobha Developers' full year net down 52%
Sobha Developers' full year net down 52%
The Hindu Business Line, May 20, 2009, Page 3
Bangalore: With a slowdown that has practically brought the real estate market to a standstill, Sobha Developers recorded a 32 per cent dip in revenues for the financial year 2008-09 at Rs 967.9 crore compared with Rs 1,422.6 crore for the previous year.
Its net profit decreased 52 per cent for the year at Rs 109.7 crore (Rs 228.3 crore). Its contractual business, which has been contributing significantly to its revenues, stood at Rs 397 crore (Rs 583 crore).
J.C. Sharma, Managing Director, Sobha Developers, said the economic downturn has had a major impact on the company in terms of reduction in sales and profits.
"While we have been able to successfully negotiate with most of our lenders for rescheduling the debt repayments in the near term, we also plan to raise long-term capital during the fiscal so as to augment the capital base and reduce the debt levels," he said.
Raising funds
S. Baaskaran, Chief Financial Officer, said the company plans to raise "anywhere between Rs 325 crore and Rs 400 crore" through qualified institutional placement depending on the valuation.
Besides, it also plans to raise about Rs 200 crore through investment via a special purpose vehicle.
Land sale
Sharma said the company is "discussing with various investors for the development of specific projects. We are also in the process of disposing of certain land in which projects cannot be launched in the near future."
According to Baaskaran, the company plans to raise about Rs 200 crore through the sale of land.
Sharma said the company is confident that these efforts will lead to a significant improvement in cash flows and the debt-equity ratio will come down before the end of this financial year.
The company has also realigned its sales and marketing focus to meet the emerging opportunities, both at the strategic as well as tactical levels.
"To do this, we have initiated several proactive measures to target this audience and invigorate sales through adopting 'innovative practices' in marketing, varying product mix, designing customised offerings for institutional sales, enhancing both the width and depth of customer reach," said Sharma.
Though these are challenging times, "there is no fear that the market might collapse. The worst is over. Market is thriving, and we are trying to tap that market now", he said.
In order to make cash flows comfortable for the next year, the company is also pruning unnecessary costs and manpower.
The company has implemented a 10 per cent cut in salaries and would downsize staff, if the situation warrants.
Tuesday, May 19, 2009
FDI irritants may go; but no change in retail for now: Kamal nath
FDI irritants may go; but no change in retail for now: Kamal nath
The Hindu Business Line, May 19, 2009, Page 13
NEW DELHI: The new UPA Government will be ready to remove procedural bottlenecks for foreign investors but allowing FDI in multi-brand retail will
not be on the immediate agenda, Commerce and Industry Minister Kamal Nath said on Monday.
"We are going to see if there are any irritants in the way ... We have got to make India a very attractive destination for investment," Nath said in an interview. He said FDI inflow to India has "not dried up ... but (getting it) has become competitive".
FDI inflows dropped in February to $1.4 billion, almost one-fourth of the inflows witnessed in the same period a year ago, under the impact of the global credit crunch. In February 2008, foreign investment was $5.67 billion. When asked whether FDI could finally be allowed in the multi-brand retail sector, Nath said, "Not for the time being ... We have done some studies, which need much more work."
Independent think-tank ICRIER had conducted a government-sponsored study on the impact of FDI in retail on neighbourhood kirana shops last year. It had said that the big stores as also mom-and-pop shops can co-exist.
Reviving FDI inflows will be a key challenge for the new government. Changes in FDI policy, announced in February, have created a lot of confusion among both domestic and foreign investors.
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