Emaar MGF Land Ltd, that is set to make an initial public offering (IPO), is likely to open its share sale to investors around 31 January and close it by 6 February at a likely price of between Rs610 and Rs690, helping it raise as much as Rs8,073 crore, according to bankers familiar with the matter.
A company official who did not wish to be named confirmed the IPO is likely to open on 31 January. “We are contemplating either 31 January or 1 February as the opening date for the IPO. In case it is 1 February, the IPO will close on 7 February,” the official said.
The price band has been fixed between Rs610 and Rs690, according to a banker close to the issue who did not wish to be named as he isn’t authorized to reveal the numbers. “We are expecting the registrar of companies to give a clearance this evening (18 January),” the banker said. The draft prospectus of Emaar-MGF will be updated after RoC gives the clearance.
“The updated prospectus will be available on Monday,” the banker said.
The roadshow for the IPO will begin next week after the prospectus is updated. Another banker close to the issue who also did not wish to be named confirmed this. However, some bankers said the price band may be readjusted, given the sharp swings in the benchmark, and some firms may get jittery about coming to the market amid volatility. The benchmark Sensex dropped about 676 points or more than 3% on Thursday. Emaar MGF is a joint venture between Dubai’s largest developer, Emaar Properties PJSC, and Delhi-based developer MGF Development Ltd. While Emaar Properties PJSC owns 41-42% of the company, the rest is held by MGF. It had filed a draft red herring prospectus with Sebi in September last year for selling 10%, or 117 million equity shares, in the company.
Analysts have mixed responses to the issue.
“The way the market is, I doubt investors will subscribe to the issue,” an analyst with a global financial services provider said. He didn’t wish to be idetified as he isn’t authorised to talk to the media. “Large caps (stocks with large market capitalisation) are down. The global selling is affecting the stock market here. I think Emaar-MGF’s issue might end up like the public issue of Puravankara Projects Ltd.”
Last year, the Bangalore-based Purvankara Projects Ltd sold shares in August and received a poor response, forcing it to extend its subscription period and reduce its price band.
Emaar MGF’s IPO comes less than a year after DLF Ltd and half a dozen other developers such as Omaxe Ltd raised more than $3 billion from the capital markets.
Not all analysts, however, have concerns that the Emaar MGF may have trouble getting investor money. “There is a Federal Reserve (the central bank of US) meeting in the US on 29 January and it is expected that the US will cut interest rates by 50 basis points,” another analyst with a domestic stock broking company said. “This will increase liquidity and we expect a run up in stocks again. So the IPO coming at the time it is will do well. It will all boil down to the interest rate cut and how the IPO is priced.”