Bengaluru: Paranjape Schemes (Construction) Ltd has let the regulatory approval for a planned public share sale lapse, and has started talks with investors to raise money, a senior company executive said. The Pune-based builder is also looking at multiple project launches this year to expand its portfolio.
Paranjape Schemes filed for an initial public offering (IPO) with the Securities and Exchange Board of India (Sebi) on 9 July 2015.
The proposal was cleared in December 2015. However, the company did not go ahead within the one-year period, and let the approval lapse in December 2016.
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“It was not the right time," said managing director Shashank Paranjape.
With an IPO no longer under consideration, the company may raise equity capital from other investors, said a person familiar with the development who didn’t wish to be identified.
Paranjape confirmed that his company is in talks with a couple of investors, but didn’t give details.
According to the IPO draft papers, Paranjape Schemes had intended to raise Rs600 crore and use the proceeds to repay loans and finance new projects.
It also planned to use some of the proceeds to repay loans of its subsidiaries.
In 2017, the developer has a robust pipeline of projects. Six launches are planned in Pune, which also includes a 106-acre township, with apartments costing Rs12 lakh to Rs5 crore. There are two launches in Mumbai and the expansion of existing projects and launch of new ones under its Athashri brand of senior living projects. In the senior living segment, Paranjape is also planning to build a large format, 30-acre Athashri village in one of its townships in Pune.
“Despite demonetization, we did encouraging sales in November and December. We are gearing up for the new real estate law and believe that the market is on its path to revival. Under the new law or RERA (Real Estate Regulation Act), supply will be restricted but we believe that prices will not be under pressure," said Paranjape.
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Given the three-year slowdown in the real estate sector, not many builders have announced plans for an IPO.
“IPOs typically need visibility of growth and profitability to attract investors. Considering that sales guidance and launches in real estate have only shown a downward trend, I don’t think IPOs are an option in the current situation," said a Mumbai-based property consultant who did not wish to be named.
The only other real estate firm which has been exploring the idea of an IPO is affordable housing developer VBHC Value Homes Pvt. Ltd, which sells homes in the Rs16-40 lakh price bracket.
“It’s not been the right time for IPOs because real estate is perception driven and it’s not been favourable among both retail and institutional investors. It will take another six months or so for the sector to gain momentum and for things to look positive," said Chintan Patel, partner, deal advisory—real estate and hospitality—at KPMG India.