New Delhi: Real estate developer Uppal Housing Ltd plans to raise around Rs3,000 crore through an initial public offering (IPO) of shares and a pre-initial public offering placement during the second half of this year to fund its ongoing projects and expansion plans.
“We are looking to dilute around 15-17% stake. But the dilution will not be more than 20%,” said Ajay Mangal, director, finance, Uppal Group. The company has hired Goldman Sachs (India) Securities Pvt. Ltd as one of its merchant bankers. “We might be hiring more merchant bankers,” Mangal added.
New Delhi-based Uppal is 100% owned by its promoters Manish Uppal and Bhushan K. Uppal. The company’s plans to launch a public issue comes in the wake of IPOs of other real estate developers. Last year, DLF Ltd, India’s largest listed real estate developer, and others, such as Omaxe Ltd, raised more than $3.7 billion from share sales.
This year, apart from Emaar MGF, which is coming out with the third largest IPO ever after DLF and Reliance Power, mid-tier developers are also looking to tap the capital market for funds.
Another mid-tier player, Faridabad-based Business Park Town Planners Ltd, plans to raise Rs1,500 crore through a public offer this year to finance its projects.
So far, none of these companies have postponed their plans in the wake of the volatility in the stock markets. On Wednesday, Emaar MGF said it would go ahead with its IPO, which is scheduled to open 1 February.
The public issue of Uppal is expected to hit the market in the second half of the year, Mangal said. Uppal will also sell shares to private equity firms before the IPO. “It is difficult to say at this juncture how much dilution we will do before the IPO but the total dilution through (placement with) private equity (firms) and IPO will not be more than 20%,” Mangal said.
Last year, Uppal raised $250 million from Trinity Capital Plc., QVC Realty and Vornado Realty Trust, but these are for specific projects and have not involved a dilution in the promoters’ holding in Uppal Housing.
Uppal plans to use the proceeds of the IPO to part finance its special economic zone (SEZ) projects. The company has notified SEZs in Gurgaon in Haryana. “We need funds for the SEZs and for our expansion plans,” Mangal said.
The company plans to invest around Rs1,500 crore by March this year to expand its operations outside New Delhi and its surrounding areas. Uppal plans to expand into Mumbai, Pune, Hyderabad and tier-II or smaller cities such as Chandigarh. The company has already launched three residential projects in Chandigarh and one each in Hyderabad, Bangalore and Mumbai.