New Delhi: Real estate developer Ansal Properties and Infrastructure Ltd, which was looking at a follow-on public offer this year to raise funds for expansion, has temporarily put aside its plans because of volatile market conditions.
Cautious approach: Ansal Bhavan in New Delhi.
Ansal API is now exploring other options for raising funds, such as a combination of debt and private equity placement at the project level, said Vijay Sajjanhar, additional vice-president, finance and accounts. The company is looking to raise around Rs1,000 crore. “The current market conditions are not good for a public issue. We will look at a follow-on public offer when the market conditions are better,” he said. “We are waiting for our bankers to advise us on what we should do.”
Earlier this month, real estate developer Emaar MGF Land Ltd and health-care chain Wockhardt Hospitals Ltd decided to withdraw their initial public offerings as their issues could not get fully subscribed even after they lowered their price band and extended the issue dates.
This isn’t the first time that India’s stock market, which touched record levels in the past one year, has gone through a roller coaster that has affected the public issue of companies. Last year, Bangalore-based real estate developer Puravankara Projects Ltd reduced its price band and extended the period of its initial offer because of volatility in the market.
Ansal, which listed in 1993, initially wanted to raise Rs1,000 crore through the sale of shares. The company had planned to issue fresh equity for the follow-on public offer. Ansal was also looking at private equity placements before the follow-on public offer. The company was initially looking at reducing its promoter holding in the company to 55% from the current 66% through a combination of a follow-on public offer and private equity placements.
Ansal is in talks with private equity players to invest at the project level. “As a part of the business model we are in talks with various players. But, we have not entered into an agreement with any player yet,” Sajjanhar said.
The company has a debt equity ratio of 0.6:1. This debt ratio could go up to one. “Typically real estate companies have a debt leverage of two or three. But, we will not go beyond a debt leverage of one,” Sajjanhar said.
Ansal API is not allowed to have foreign private equity investment at the company level because it is not foreign direct investment compliant.