New Delhi: Developer Emaar MGF Land Ltd, which was forced to abandon the country’s third largest public offer of shares after buyers kept away, said it would restart the entire process at a later date.
The first attempt cost it up to Rs40 crore in marketing an issue that it ultimately pulled. Mint couldn’t ascertain whether the amount included bankers fees.
“We have not decided on a time frame to revisit the market. The whole process will have to start again,” Sanjay Baweja, chief financial officer, Emaar MGF said. “We will look at the market conditions. We will internally review the situation and decide on the time frame for the IPO.”
The permission to go for an IPO is valid for only three months, after the market regulator gives its final comments on the company’s draft offer documents, said a banker to the issue who did not wish to be named due to the sensitivity of the matter. Emaar MGF filed for approval five months back and was given the green light in January.
Evaluation on: The Emaar MGF office building at Connaught Place, New Delhi. The company entered the capital market on 1 February with an IPO of 102.57 million equity shares to raise more than Rs6,400 crore. (Photo: Harikrishna Katragadda/ Mint)
The company entered the capital market on 1 February with an IPO of 102.57 million equity shares to raise more than Rs6,400 crore. A tepid response to the issue forced the company to lower the price band of the shares twice from Rs610-690 to Rs530-630 and also extend the period of public offer until 11 February.
The withdrawal of offer documents by Emaar MGF will also impact the pre-IPO placement of equity shares. The company said it would restart price negotiations with three companies that had picked up less than 1% stake in Emaar MGF in the middle of January.
“We are talking to the merchant bankers on this,” Baweja said.
Two of India’s leading media houses, New Delhi Television Ltd (NDTV) and Bennett, Coleman and Co. Ltd (BCCL) had picked up minority stakes for Rs25 crore each. IFCI Ltd, the Delhi-based financial institution, also participated in the pre-IPO placement and paid Rs50 crore for its stake. The stakes picked up by the media firms account for a fraction less than 1% of shareholding in Emaar MGF.
“It just happened... We will obviously evaluate the whole thing,” Narayan Rao, chief executive officer of NDTV Ltd said over the weekend. “It is not like we have lost out any money.”
BCCL said it had a private treaty agreement with Emaar MGF and that its agreement with Emaar remains the same. “It is a mutually beneficial relationship with Emaar. The withdrawal of the IPO does not affect the pre-IPO placement,” said Ravi Dhariwal, president of BCCL Ltd.
IFCI could not be reached for comment.
In the offer documents, Emaar MGF said the number of shares issued as part of pre-IPO placement was determined by the ‘cap price’, which is the top end of the price band. With no reference rates for allotment of these shares, Emaar MGF would now have to fix a new price.
Emaar MGF is a joint venture between Dubai’s largest developer Emaar Properties PJSC and New Delhi-based developer MGF Developments Ltd.
Asked whether the withdrawal of the IPO would hurt the company’s expansion plans, with a debt equity ratio of less than 1:1, Baweja said, “funding will not be a problem. Our capability to raise debt is high.” He added, “We also expect a lot of cash inflow to come in from the sale of units in our residential projects.”He didn’t detail these.