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Lodha Developers, now known as Macrotech Developers, is planning to file a draft red herring prospectus (DRHP) this week for an initial share sale, two people familiar with the development said, as investor sentiment improves and home sales rise.

The Mumbai-based developer plans to raise around 2,500-2,700 crore through the initial public offering (IPO), the people cited above said, about half the 5,500 crore it targeted in 2018.

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This would be the developer’s third attempt at an IPO. It filed its first share sale documents in September 2009 to raise around 2,800 crore but shelved its plan in the aftermath of the 2008 global crisis. Lodha later revived its plan to do a public listing in 2018 after receiving the market regulator’s approval but withdrew it after a liquidity crisis hit the real estate sector.

Lodha’s proposed IPO this year comes at a time the residential sector has witnessed some green shoots of recovery after a prolonged slowdown.

“The DRHP is expected to be filed in a day or two. The IPO proceeds will be used to pare debt as well as for new projects," said one of the two people cited above, both of whom spoke on condition of anonymity.

A spokesperson for Lodha declined to comment.

Lodha Group, India’s largest real estate developer by residential sales, said it registered over 2,500 crore of bookings in the quarter ended 31 December. The firm saw increased demand for its luxury and premium homes, clocking around 1,000 crore of bookings in this segment, while the mid-income and affordable business fetched 1,500 crore of bookings during the period.

In November, Moody’s Investors Service affirmed Macrotech Developers’ Caa1 corporate family rating (CFR) and Caa1 senior secured rating of Lodha Developers International’s dollar bonds, guaranteed by Macrotech Developers, and changed the outlook on the ratings to stable from negative.

The ratings affirmation and change in outlook to stable was a consequence of the firm’s improved liquidity position following the refinancing of its construction loan for Grosvenor House, London project and a gradual recovery in its operating performance, Moody’s said.

Despite the improvement in its liquidity position, the company continues to face sizeable debt maturities of around $800 million in India and London over next 18 months.

Mumbai-based Puranik Builders received regulatory clearance for a 1,000 crore IPO in early 2020 but decided not to launch it. Bengaluru-based Shriram Properties also got permission for an IPO but didn’t go ahead with it either.

“The residential sector is a different ball game and comes with its own risks compared to stable, income-generating commercial office assets. We have to see how the Lodha IPO plays out and if it does well, it will be a turning point for the housing sector," said a Mumbai-based property consultant, requesting anonymity.

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