India’s second-largest listed real estate firm by market capitalisation, Unitech Ltd, is looking to raise money by selling shares through a real estate investment trust in Singapore as it looks at ways of unlocking value from its property assets.
Separately, the company also got initial approval to operate mobile phone services in India and will need to pay Rs1,650 crore to the telecom department for such rights.
Unitech is also looking to raise at least $1 billion (about Rs3,900 crore) by selling shares to institutional investors, said a person familiar with the matter who is not authorized to speak to the media. Unitech plans to raise around $700 million from the initial public offering in Singapore and the listing is likely tohappen by March, said thesame person.
Still, this is less than the amount the company had planned to raise initially. In June, Unitech said it plans to raise $2-3 billion by listing a real estate investment trust (Reit) in an overseas market, which was likely to be Singapore.
Reits use money from investors to purchase and manage property. They are traded on major exchanges, just like shares. Much of the income from the properties owned by Reits is shared among its investors.
It wasn’t immediately clear why the amount Unitech intends to now raise has beenreduced from the original estimates.
Unitech’s roadshow, or conversations, with potential institutional investors is already under way and likely to wrap up in about 10 days, according to the person close to the development. The amount the company finally raises will be decided based on response from the investors, but Unitech would like to raise at least$1 billion, the person said. It is not clear how much equity the company would be diluting in the process.
The proposed trust, called Unitech Office Trust, has been given preliminary clearance by the Singapore Stock exchange, said the developer in a notification to the local exchange in India
Initially, the wholly owned subsidiaries of the business trust would hold the entire shareholding of three Indian companies holding development properties in India, which are in two information technology (IT) and IT-enabled services special economic zones in Gurgaon and Kolkata, and an IT park in Noida, near Delhi.
The subsidiaries of the trust would acquire the shareholding of the three companies from its current shareholders: Unitech Corporate Parks Plc.— Unitech’s real estate investment arm listed on the Alternative Investment Market of London Stock Exchange— Maxion Ltd and Unitech Ltd (including its affiliates).
India’s largest developer by market value, DLF Ltd, is also planning to list its office trust in Singapore. India has not yet introduced legislation to support Reits. But, market regulator Securities and Exchange Board of India recently issued draft regulations on Reits and is seeking industry comments.
Unitech shares rose by 0.12% to close at Rs517.55 a share on the Bombay Stock Exchange on Thursday.