Shriram Properties MD MD Murali Malayappan. TPG Capital, Starwood Capital, Walton Street Capital and Tata Capital, which hold a combined 58% stake in Shriram Properties, will partly monetize their shares through the proposed IPO.
Shriram Properties MD MD Murali Malayappan. TPG Capital, Starwood Capital, Walton Street Capital and Tata Capital, which hold a combined 58% stake in Shriram Properties, will partly monetize their shares through the proposed IPO.

Shriram Properties plans to file IPO papers by December

Shriram Properties, the real estate subsidiary of the Shriram Group has hired Axis Bank, Nomura and Edelweiss to manage the IPO, says MD Murali Malayappan

Mumbai: Bengaluru-based Shriram Properties Ltd plans to file its draft prospectus with markets regulator Securities and Exchange Board of India (Sebi) by December for its proposed initial public offering (IPO), said two people aware of the matter.

The real estate subsidiary of the Shriram group has hired Axis Bank Ltd, Nomura Financial Advisory and Securities Ltd and Edelweiss Financial Services to manage the share sale, its managing director Murali Malayappan said.

Murali, however, declined to give a specific timeline for filing the draft prospectus, but said the company plans to launch the IPO before the end of this financial year.

“We are in a preparatory stage to file documents before the end of this year," said Gopal Krishnan, executive director and chief financial officer, Shriram Properties.

“We have started working with bankers and lawyers exploring opportunities for capital raising and, hopefully, we will test the market soon," Krishnan said.

An Axis Bank spokesperson declined to comment, while queries sent to Nomura and Edelweiss remained unanswered.

Private equity firms TPG Capital, Starwood Capital, Walton Street Capital and Tata Capital, which hold a combined 58% stake in Shriram Properties, will partly monetize their shares in the company through the proposed IPO, said Krishnan.

“The IPO will provide the kind of liquidity that our investors would be looking at. So all will be monetizing their existing positions. It will be a good liquidity from their perspective as well," he said.

This year, real estate companies Lodha Group and Puranik Builders Ltd have filed documents to launch IPOs.

The last time a private real estate firm launched an IPO was in 2010. That year, several companies, such as DB Realty Ltd, Prestige Estates Projects Ltd, Oberoi Realty Ltd, Nitesh Estates Ltd and Man Infraconstruction Ltd, had collectively raised around 4,275 crore.

“(The) economy is growing. We see a good demand. There is no slowdown (for good developers)," said Murali. “Customers are choosing to buy homes from good developers. The market has been able to differentiate who can deliver and who cannot," he said.

Shriram Properties plans to rapidly expand and has adopted an asset light model of development management (DM) to ramp up its residential portfolio. It is also actively looking at acquiring distressed assets to strengthen its property businesses in existing markets, including Bengaluru, Chennai and Hyderabad.

Under the DM model, large realty firms step in as development managers for smaller developers and landowners in return for a share of the revenue, share of profit or a management fee.

“In this changing landscape, we have taken the DM route as a model to grow in an asset light way, and at the same time scale up quickly. We are giving greater emphasis on the DM model, which has gained large share of our portfolio now," said Krishnan.

Till 2017-18, Shriram had one project under DM. However, in the last one year, it has signed a dozen such projects and this is likely to comprise a third of its upcoming project pipeline, Krishnan said.

Close