New Delhi: Real-estate firm Omaxe Ltd has received clearance from stock market regulator Securities and Exchange Board of India (Sebi) for its initial public offering of 17.8 million equity shares, becoming the second developer after DLF Ltd to get clearance for an IPO this month. This comes a few weeks after the regulator tightened norms for real-estate listings.
Omaxe has not yet decided on the timing and the price band for the shares.
“We will wait for a feedback from our bankers and evaluate all our options before we decide,” said a company spokesperson.
Omaxe IPO comes at a time when a slew of big-ticket share sales such as ICICI Bank Ltd and DLF Ltd are likely to hit the market. Both are expected to be among the biggest sales from the Indian market. The DLF IPO alone may raise about $2 billion (Rs8,200 crore), according to some analysts. The two will mop up a lot of available funds from equity investors.
“It is not a great environment right now,” Manish Gunwani, vice-president, Brics Securities, said. “The big IPOs will obviously take the centrestage. But at the end of the day, it will all depend on the company. If the pricing is reasonable and if the company has a good proposition for investors, the IPO could do well.”
Gunwani also believes this is not the best time for IPOs of real-estate companies because property prices are either stable or sliding, arresting at least three straight years of gains.
Real-estate companies have been in the spotlight with the government cautioning banks against excessive lending to the sector.
It has also slapped restrictions on the sale of stakes by real-estate firms to foreign investors ahead of a listing and tightened overseas borrowing for the sector. The market regulator has asked for greater transparency, especially with regard to the ownership of land.
Omaxe will now start the process of updating its draft red herring prospectus to incorporate details that the regulator has asked for. Sebi has made certain comments on the company’s draft red herring prospectus related to disclosures.
“We need to comply with the questions raised by Sebi, and therefore, the prospectus will have to be updated to include those details as well,” the company spokesperson said. He declined to say what the questions were.
Once the prospectus is updated and gets a final clearance from Sebi, Omaxe will submit the final red herring prospectus to the Registrar of Companies. “We will start the road shows for the IPO and decide the price band after we submit the prospectus to the Registrar of Companies,” the company spokesperson said. He didn’t give a time frame for this.
Omaxe had filed its draft red herring prospectus with Sebi in December. Of the total equity float, 17.5 million equity shares are for public, while the balance 2.97 lakh shares are reserved for eligible employees of the company.
There will also be a greenshoe option of 17.50 lakh equity shares. A greenshoe provision allows the underwriter the right to sell investors more shares than originally planned by the issuer.
The issue, including the greenshoe option, would constitute 10-11% of the fully diluted post issue paid up capital of the company.
The company has appointed DSP Merrill Lynch, Citigroup Global Markets India, and UBS Securities India as global coordinators to the issue.