Lavasa IPO likely to be delayed again
The company has been advised to wait till the market improves even though it has in place approvals from Sebi to raise Rs750 crore through IPO
Mumbai: Ajit Gulabchand-led Hindustan Construction Co (HCC) Ltd may delay a sale of shares in its subsidiary Lavasa Corp because of a lack of investor appetite for real estate companies.
The company has been advised by its book running lead managers to wait till the market improves even though it has in place approvals from the Securities and Exchange Board of India (Sebi) to raise ₹ 750 crore through the initial public offering, HCC group chief executive Praveen Sood said.
“We have time till November (to launch the IPO) but the market has no appetite for a realty IPO. We are waiting," Sood said.
The company had earlier said it would likely launch the IPO during the July-September quarter of this financial year. Sood did not specify when the share sale would take place.
“Exuberance (for IPOs) today is only in the dot com sector," Pankaj Kapoor, managing director at real estate rating and research firm Liases Foras said. “Real estate has lost its story. The sector earlier sold the growth story—that property prices will grow and the sector will grow, but investors have lost their own bet."
After hitting an all-time high of ₹ 13,848.09 on 8 January 2008, the BSE Realty Index comprising of 13 companies has fallen 90% till date.
HCC first decided to raise ₹ 2,000 crore by launching Lavasa’s IPO in November 2010—a plan that was later shelved. In July 2014, Lavasa Corp filed its draft red herring prospectus (DRHP) with Sebi to raise ₹ 750 crore. It received Sebi approval in November 2014. Axis Capital Ltd is the lead manager for the IPO.
Apart from the possibility of an IPO, Sood said the company has evaluated options to sell an additional stake in Lavasa Corp to monetize assets.
“Selling additional stake is one of the options, but we have not taken a decision yet. This can bring in more money in HCC."
As of March 2015, HCC had total standalone debt of ₹ 4,582.32 crore.
HCC has been selling non-core assets to bring down debt. In June, the company sold its 26% stake in Mumbai’s Vikhroli Corporate Park to private equity firm Blackstone Group LP for ₹ 200 crore. In April it announced a stake sale in highway project Dhule Palesner Tollway Ltd to Sadbhav Group for ₹ 204 crore.
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