The proposed initial public offer (IPO) of real estate firm Lodha Developers Ltd to raise Rs 4,200 crore is unlikely to come in near future due to choppy market conditions, according to market sources.
As a result, the company has made alternate arrangements to raise funds to continue business operations, sources said.
Lodha has six months to file for the IPO as its draft red herring prospectus filed with Sebi is valid till July 2019.
"Due to unfavourable market conditions, like various other companies, Lodha Developers too has put IPO plans on the backburner. This is the second time when the company has been unlucky due to external circumstances over which they do not have any control," said a market source.
Lodha had planned to raise Rs 5,500 crore, which was trimmed down to around Rs 4,200 crore, as per market sources.
After feeling liquidity crunch, the developer started working towards alternate fund raising options. In November 2018, Lodha decided to sell its equity interest in their London properties.
The company has two properties – Grosvenor Square and Lincoln Square in London and plans to complete the projects in 2019. These projects are fully funded by the top lenders and have sold well at around £500 million.
With the London transaction, it intends to raise about Rs 4,200 crore, which is same as the trimmed down IPO value. Post the equity sale in the two properties in London, the Group company will continue to be development manager of these two properties.
In other private equity transaction, as per reports, Lodha is in the process of raising Rs 4,000 crore and further reduce the debt.
As of last fiscal, the total debt of its India business was around Rs 18,000 crore.
According to a primary-market analyst, on condition of anonymity, while government has a disinvestment target and may still go for IPOs in the volatile market, the same would not work for private companies seeking good valuation.
"We aren't expecting any big-ticket IPOs coming up before the general elections. Most companies are staying away from the market, else they have to offer discount on their pricing," the analyst said, adding that Lodha will not be the only one to consider deferring IPO plans till the market conditions improve.
The company has been focusing on de-leveraging its debt to get credit ratings upgrade over a period of 12 months. The goal is to become AA-rated company by way of strengthening the balance-sheet.
In July 2018, Lodha had received a nod from Sebi to raise the funds. The earlier plan was to launch the IPO in August 2018 but was put on hold. This is the company's second attempt to list on the stock exchanges. Back in September 2009, they had filed its DRHP to raise about Rs 2,800 crore. It had received Sebi's nod in January 2010, but later shelved due to unfavourable market conditions post the global financial crisis.
Now, the company’s latest DRHP is valid till July 2019. Hence, it has six months more to wait for market conditions to improve and the company is confident of launching the IPO in the months to come. "The proposed IPO is very much on the anvil. The company will decide on the timing of the issue based on the market conditions," said a Lodha Developers spokesperson to DNA Money's questionnaire.
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Lodha had planned to raise Rs 5,500 crore, which was trimmed down to around Rs 4,200 crore, as per market sources.
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