Approvals received by several real estate developers for initial public offers (IPOs) have lapsed or are set to lapse, forcing them to raise more expensive debt or seek private equity (PE) deals.These include Lodha Developers, which was the first to receive the nod on January 21, 2010, but failed to hit the market within the approved timeline.“We are able to raise cash through internal accruals and deploy it and money is still available in the market. Just that the borrowing cost is 200 basis points higher than last six months. We are not sure about the PE market as the entire sector is heavily tainted and these international fund guys are not interested in this sector,” a senior official of the company said, requesting anonymity.New Delhi-based Emaar MGF Land, which had received the nod on February 18, 2010, had refiled its prospectus in September with a revision in the amount it wanted to raise from the public. The company, which was earlier looking to raise Rs2,000 crore, is awaiting approval of the Securities and Exchange Board of India (Sebi).Pune-based Kumar Urban Infra, promoted by Lalit Jain, will complete a year of sitting on its approval on March 22. It has been looking to raise Rs450 crore, half of which was designated towards repayment of high-cost debt taken from Standard Chartered, ICICI Bank and LIC at an average debt cost of 15%.Other companies that had received Sebi approvals but are yet to hit the capital market are north-based BPTP, which was looking to raise Rs1,500 crore and whose approval ends on May 3, and Mumbai-based Neptune Developers, which wanted to raise Rs495 crore and whose time runs out on April 29.“It is very unlikely any of the developers would be able to raise anything from the capital market. Going by our interactions with investors, they are just not ready to listen to any realty story,” said an analyst tracking the sector.“For those who think the stocks are available cheap right now, let’s not forget what happened last time — investors participated in the qualified institutional placements (QIPs) thinking they were cheap, but the stocks have fallen more than 50% from those valuations. The biggest problem is for the unlisted developers — they can’t even go around pledging shares,” the analyst said, requesting he not be identified.Meanwhile, with the unlisted players out of the fray, some listed realtors are learnt to be talking to bankers for follow-on public offers (FPOs) to raise money, mainly to pay off debt.Delhi-based Omaxe Ltd, for one, is looking at either an FPO or sale of equity in the secondary market. The company was planning to raise Rs400 crore through QIP. It has debt worth Rs1,640 crore on its books and wants to pay back at least Rs350 crore by June this year. However, the company has not finalised the amount or the alternative mode through which to raise funds.According to guidelines issued by the capital market regulator in December, 2010, companies with less than 25% public float cannot raise funds through private placements with institutions. They can, however, raise funds through public sale of shares.“In the current market situation, fundraising through FPOs will be difficult for the realty companies. Public float in case of a large number of realty companies is way below 25%. To beat the funding blues, the realtors will have to depend significantly on new project launches,” Mona Chhabra, associate director (real estate), Ernst & Young said.

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