Housing Development and Infrastructure, a Mumbai-based real estate developer is planning to tap the public through an initial public offering soon.
Vivek Kaul & Vishal Chhabria
MUMBAI: If you are the kind who is still watching the cricket World Cup, you might have noticed a four-letter logo on the umpire’s shirts: HDIL. It stands for Housing Development and Infrastructure Ltd, a Mumbai-based real estate developer which plans to tap the public through an initial public offering (IPO) soon.
The company hopes to raise upwards of Rs 2,000 crore for land acquisition and projects by issuing three crore shares, some of which may be placed with institutional investors before the IPO.
As with all real estate companies, the company’s draft red herring prospectus (DRHP), filed with Sebi in February, does not paint a convincing picture. There can be questions raised about how much of the land bank the company really owns, how fairly they have been valued, and why the company suddenly saw a jump in profits just before the public issue (See box).
For a company like HDIL, what is most important is clear title to the land the company holds and what it can reap out of it. This is where the main concerns are and this hasn’t been adequately explained in the DRHP.
Of the 112.4 million square feet of saleable area that the company has, around 78% is in its own name. For the remaining area, there is some sort of an agreement in place, but the company does not have title to the land. This has been declared this in the DRHP. But when it comes to valuing the saleable area, the real estate consultants employed by the company, Cushman and Wakefield and Knight Frank India, have taken the entire area of 112.44 million square feet into consideration.
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