DLF Gets Ready for DAL listing

DLF has completed the merger of Caraf Builders & Construction, which owns investment trust DLF Assets Ltd (DAL), with another offshoot DLF Cyber City, a move India’s biggest realtor says is logical to listing DAL on the Singapore Stock Exchange (SGX). A company spokesman confirmed the development while two senior executives involved in the listing process said DAL, set up to acquire properties from DLF and other developers for leasing out to third parties, is likely to be listed on SGX in the first quarter of 2010-11 .

Though DAL’s listing was not dependent on the merger, it was important that the integration with Cyber City, a wholly-owned subsidiary, was completed before the listing as the move is also aimed at further streamlining all commercial assets under one head, said the first executive on condition of anonymity. Under SGX norms, a company planning to list cannot reveal listing plans before its draft prospectus is approved.

Merging DAL, which buys and manages commercial assets on the lines of real estate investment trusts, with Cyber City will ringfence DLF from the uncertainties of the property market as it guarantees a steady stream of revenues, said the second executive. DLF acquired Caraf from promoters KP Singh and family last December in a share swap deal and decided to give it a 40% stake in its Cyber City. By consolidating the group’s rental assets, that transaction too was aimed at ensuring a steady cash flow.

The rental business of DLF and Caraf together generated annual incomes of Rs 700 crore and Rs 550 crore in the current fiscal. Post-merger , the rental business is expected to give DLF an annual come of Rs 1,500 crore in 2010-11 , which should be 20% of the total income, said the second executive . As the merger is effective from March 19, its effect will not be reflected in the current financial year, he added.

Realty stocks plunge on RBI rate hike

22 Mar 2010, 1120 hrs IST, PTI

MUMBAI: Stocks of realty firms slipped as much as 4 per cent on the Bombay Stock Exchange (BSE) after the Reserve Bank hiked key interest rates to tame inflationary concerns, a move that could make home loans dearer. 

Realty firm Unitech slipped to Rs 70.55, down 4.27 per cent and country's largest realty player DLF fell 3.53 per cent to Rs 301.65 on the BSE in the early morning trade. 

Realty index on BSE which comprises 14 realestate stocks slipped 2.59 per cent to a low of 3,254.26 points. 

"Realestate sector is rate sensitive, rate hike by the Reserve Bank of India will make home loan costly for the common man in turn affecting the product of the realty estate firms as their will be less buyers," SMC Capital Vice-President Rajesh Jain said. 

Other stocks who were under pressure are -- Indiabulls Real Estate (down 3.03 per cent), HDIL (2.06 per cent), Ackruti City (1.16 per cent) and Sobha Developers (0.84 per cent). 

On Friday, the RBI hiked the short-term rates at which it borrows and lends funds to banks by 25 basis points each, adopting a tight money policy. 

The Central bank raised the repo( rate at which it lends to banks) and the reverse repo rates (the interest it pays to the banks on deposits) by 25 basis points each to 5 per and 3.5 per cent, respectively.

Is Prestige Estates Doing A Rethink On Rs 1.2k Crore IPO?

March 17 2010, 09:20:58 IST | BOBY KURIAN

Promoter rebuts market rumours, says he's waiting for final SEBI clearance.

There are speculative talks that Bangalore-based real estate major Prestige Estates may be "re-thinking" on its proposed plan to raise up to Rs 1,200 crore through an initial public offer (IPO). Prestige had filed its draft red herring prospectus with Securities Exchange Board of India in November last year for the public issue for divesting up to 15%-20% stake.

Sources directly familiar with the development said, the promoter family was in the midst of a re-think, which might see it deferring the plan or even dropping it. The firm is yet to receive a     final clearance from the market regulator nearly four months after filing the prospectus. It has appointed Enam Securities, UBS, J.P. Morgan and Kotak Mahindra Capital as its book running lead managers for the issue.

An email sent to Prestige Group chairman Irfan Razack, seeking a confirmation on IPO deferment, did not elicit a response at the time of posting this article. However, Razack replied through a text message, saying, “just to set the record straight, we have not deferred our plans for IPO. We are just awaiting the final nod from SEBI and are fully geared up.”

The three co-promoters are Irfan Razack, Rezwan Razack and Noaman Razack and their family members own 33% each in the company. One source, who did not wish to be quoted, said, the family was still debating whether remaining private was in the best interest of the company's growth ambitions and for the future roadmap being readied by the promoters. In doing this, the promoters have looked at the experience of some city-based realty peers who went public.

"While the work on IPO may be still on, there exists a possibility of them not going ahead with the public issue for the time being at least," said a second source familiar with the situation. "I do not see the issue going through before June this year even if the momentum is stepped up," he added.

Further, the market appetite for real estate issues seems to be evaporating with the last few issues performing badly on debut. The last two listing in this space, DB Realty Ltd and Vascon Engineers, are currently trading below the lower band of their issue prices.

DB Realty, which had slipped by 10% on its debut, is currently trading Rs 456 against the issue price of Rs 468-486. Vascon, which is involved in EPC and realty business, is currently trading at Rs 141.5, a 14% discount to its issue price of Rs 165.

And there is still a long list of realty firms working towards an IPO. This includes over half a dozen players like Emaar MGF, Lodha Developers, Sahara Prime, Prestige Estates, Nitesh Estates, BPTP and Oberoi Realty. While BPTP has said it plans to raise Rs 1,500 crore in the early next fiscal, Emaar MGF and Lodha also have SEBI approval for a Rs 3,850-crore and Rs 2790-crore offerings, respectively, but have not decided on a timeframe for the issues.

"Valuation challenges are significant and the possibility of having to divest more shares than anticipated is real," explained a top honcho at real estate firm, which may be eyeing the public markets in the short run.

Prestige promoters have been running very closely-held operations and have shied away from private placements at the holding entity level several times in the past. The company has attracted private equity funds from CapitaLand of Singapore  and Redfort Capital at the SPV level. In context, it is left to be seen if the promoter family would walk the extra mile to convince the market, which is growing skeptical about more realty issues.

One of the reasons behind a possible IPO from Prestige was the fact that the next-generation promoters wanted to run a professional operation, and not being hands-on managers. And a listed entity was seen as better suited to attract professional managers. So a possible rethink and deferring of IPO plans could be dictated by the market conditions as well as a closer scrutiny of the business roadmap for the future.

A large part of its saleable area is in the residential space besides exposure in retail, commercial buildings and hospitality. For the year ended March’09, the company had a total income of Rs 914 crore with net profit of around Rs 77 crore. The realty sector, which suffered a severe slowdown on account of the global crisis, is now slowly recovering with sales picking up and the demand for quality office space now resurfacing. Source: VCCircle

CCCL Infra looking at PE for Rs 2,000 cr investment

Business Standard: March 10, 2010

Chennai: CCCL Infrastructure Ltd, part of the Chennai-based Consolidated Construction Consortium Ltd, is planning to raise money through private equity for its proposed investments to the tune of around Rs 1,500-2,000 crore. Besides, the company is also planning to foray into power generation and logistics business.

Speaking to Business Standard E Viswanathan, chief executive officer, CCCL Infrastructure Ltd said over the next 18 months the company is planning to invest around Rs 1,500 to Rs 2,000 crore in various projects.

“We are looking for private equity fund to partly fund the investment.” The company is presently in the process of evaluating the value and proposed dilution, he added.

The proposed investment includes Rs 153 crore to create infrastructure at Pearl City Food Port (SEZ), a special economic zone for food processing industry being set up by the company at the port city of Tuticorin in south Tamil Nadu.

“The first unit, being set up by Hexa, a honey maker, is likely to start production by end of this month in the SEZ.”

The company has acquired around 900 acres for setting up the SEZ which will also have a residential project, helipad, hotels, golf course and others.

“One of the first of its kind infrastructure would be automated movements of goods within SEZ.” Since the SEZ will cater to export market, especially to quality-sensitive markets, no vehicle will be allowed inside the SEZ, and the entire SEZ will be automated whereby any movement within the SEZ will be on conveyor, said Viswanathan.

“Housing project would cost around Rs 400 crore, which will be taken as part of phase II development,” he added. The company is also scouting for partners for schools and other commercial developments inside the SEZs.

The other projects, in which the company is planning to invest are automatic car parking facility in Delhi for an estimated cost of around Rs 272 crore and a Ro-Ro facility, for handling cars, at Chennai port for an estimated cost of around Rs 150 crore.

“We got L1 for setting up the automatic car parking facility, which will handle 1,500 cars. The project will be executed on a 30 year BOT model,” said Viswanathan.

Commenting on the proposed foray into logistics business, he said, the company has tied-up with a Korean-company, he declined to reveal the name, to create automatic RoRo facilities at Indian ports. “We will jointly bid for Chennai Port project first, which is estimated to be around Rs 150 crore.”

The company won Chennai-Tirupathi road connectivity project and likely to take up two more road projects. “Total aggregate value of these projects would be around Rs 1,500 crore.”

“The other major diversification would be power,” said Viswanathan. The company is planning to set up a one mega watt solar-based power plant at Tuticorin. The plant can be expandable to five mega watt. “We will finalise the papers by March.”

He added, the company will also look at bio-mass based power plants in Tuticorin, once the SEZ gets 60-70 per cent occupancy. “We can source raw materials for the power plant from the SEZ,” said Viswanathan.

BPTP plans Rs 1,500 cr IPO in early 2010-11

Press Trust Of India / Mumbai March 11, 2010, 1:00 IST
Real estate developer BPTP today said it plans to raise around Rs 1,500 crore through an initial public offer (IPO) by early 2010-11. “We have applied to the Securities and Exchange Board of India (Sebi) for approval. We hope to launch our IPO of Rs 1,500 crore early next fiscal,” BPTP Managing Director Kabul Chawla said.

The company, which has a net worth of Rs 1,600 crore, is hoping to clock a top line of Rs 1,000 crore and profit after tax of Rs 200 crore in FY10.

The company plans to pre-pay its Rs 325 crore debt from the issue proceeds, while Rs 500 crore has been earmarked for government use (conversion of land), he said.

The realty major has a consolidated debt of Rs 900 crore.

In 2011, Rs 150 crore will come up for repayment and the year after Rs 600 crore, Chawla said, adding “though we are not stressed in terms of debt, we plan to pre-pay Rs 325 crore out of the issue proceeds”.

JP Morgan and SSKI are the book running lead managers (BRLMs) to the issue.

The company, which is primarily into mid-housing development, also has four special economic zone (SEZ) projects but, is currently going slow on them.

“Given prevailing market conditions, we have deferred activity on our SEZs so as not to over leverage our balance sheet,” Chawla said.

Going forward, BPTP might explore the option of converting these SEZs into residential use, Chawla said.

“We have the option of converting our four IT SEZs, at Noida, Greater Noida, Gurgaon and Faridabad, for residential purposes. We might exercise this option if the market conditions so demand,” he said.

On its focus on the national capital region (NCR) market Chawla said: “There is tremendous potential here and we intend to continue focussing on this region.”

Besides NCR, the company has one project in Hyderabad spread over 10 acres, which it plans to take up at an appropriate time.

BPTP has a land bank of 1,860 acres. It has 37 million sq ft of ongoing projects and has sold 31 million sq ft, worth Rs 5,500 crore, so far. Its receivables stand at Rs 2,500 crore.

JP Morgan and Citi currently hold 12 per cent stake in the company while, Merrill Lynch has 49 per cent stake in one of its Special Purpose Vehicle (SPV) — Vital.

At present, Citi Properties holds 50 per cent stake in its Faridabad SEZ SPV, 17 per cent in its Noida SEZ SPV and 43 per cent in its Greater Noida SEZ SPV.

Emaar MGF's Rs 7000cr IPO gets Sebi nod

Press Trust of India / New Delhi January 11, 2008

Real estate major Emaar MGF has received market regulator Sebi's approval to launch an initial public offer to raise about Rs 7,000 crore. The issue is likely to hit the capital market in the first week of February, and is expected to be listed by February-end, banking sources said.

Emaar MGF, a joint venture firm between Emaar Group of Dubai and Delhi-based MGF Development, had filed a draft red herring prospectus with Sebi in September last for selling 10% stake (11.74 crore shares) in the company to the public through the IPO. Emaar Properties chairman Mohamed Ali Alabbar had said in December that the JV firm would be raising about USD 1.7 billion through dilution of 10% stake. DLF, the biggest real estate firm, had last year mopped up over Rs 9,000 crore from its IPO. The global coordinators and book running lead managers to the issue are Enam Securities and DSP Merill Lynch. The Citigroup Global Markets India, Kotak Mahindra Capital Company, HSBC Securities and Capital Markets, JPMorgan India and Goldman Sachs (India) Securities have been appointed as book lead managers for the issue. The equity shares of the company would be listed on the Bombay Stock Exchange and National Stock Exchange. Emaar MGF has a land bank of over 12,500 acre, which is spread over 22 cities in 16 states in India. It has commenced projects in eight cities in seven states in India. The company is engaged in development of properties in residential, commercial, retail and hospitality sectors. In addition, it has identified healthcare, education and infrastructure as business lines for future growth.

IPO-bound realtors sitting on fence despite SEBI nod

Mumbai:

Less than a couple of months ago, real estate firms were in a tearing hurry to file their initial public offering (IPO) prospectus with the Securities and Exchange Board of India (SEBI).

And now, many firms are unsure if they should hit the market right away, even though they have got the ‘green signal’ from the regulator. While key indices have recouped their losses suffered in January, investors remain wary of realty firms.

The poor performance of the recent offerings in the sector is the main reason, while liquidity concerns because of the year-end factor is also keeping IPObound companies in check, say market watchers.

“We have received the required clearances from Sebi and are looking forward to coming out with our IPO in the near future,” said Abhishek Lodha, MD, Lodha Developers, without specifying a deadline.

Lodha Developers, Ambience, Emaar MGF and Nitesh Estates are the leading companies that are yet to open their books for subscription despite getting the blessings of SEBI.

Together, these four companies are looking to mop up around Rs 8,000 crore through their IPOs.

“Primarily, the market sentiment towards realty has not been very encouraging. Hence, a lot of players are waiting,” said S Subramanian, head of investment banking, Enam Securities.

In the past six months, the ET Realty index is down 22% compared to a 6% rise in the 30-share Sensex, reflecting investor apathy towards property developers.

“There is an investor fatigue for realty issues, because of an abundance of forthcoming issues, and also their performance on bourses has been lacklustre,” says S Sriniwasan, CEO, Kotak Realty Fund.

Recent listings of realty and infrastructure companies like DB Realty, Vascon and Godrej Properties have not been encouraging, with brokers attributing the downtrend to the issues being overpriced.

“Promoters are not ready to budge from the benchmark valuation of their companies and have been valuing their companies exorbitantly. Such unrealistic assumptions create a mismatch between the way an analyst values a realty company and creates a 30-40% inflationary element,” says market expert SP Tulsian.

Also, the government’s divestment drive has sucked out a lot of liquidity from the system. The latest public sector offering, NMDC, is aiming to raise between Rs 9,500-11,000 crore from the primary market. Moreover, as the financial year ends in March, most fund houses have exhausted their investment limits.

So, it appears that most realty companies may decide to open their issues in April. And as the IPO sanction is valid for one year, there are no regulatory compulsions. All that needs to be done is to update the quarterly accounts, said the promoter of a real estate firm which is awaiting Sebi approval. Source: MagicBrick

SEC norms hit NRI investments

Peter Arckal, TNN, Mar 6, 2010, 02.37am IST

MUMBAI: The tightening of compliance norms by US regulator Securities Exchange Commission (SEC) may force foreign financial companies in India with operations in the US to revisit their business strategy for NRIs based in that country. 

According to analysts, the norms, which come into effect on March 12, could increase costs for financial services companies. The amended rule will provide SEC and the public better information about the custodial practices of registered investment advisers. 

In light of these regulations, ING Vysya has discontinued securities services -- portfolio management scheme and MF investment -- for NRIs who are ‘‘designated US persons''. In a letter to an NRI based in the US, the bank said: ‘‘Various US securities and tax regulations relating to the provision of certain securities services have an extraterritorial reach. As a result, ING Vysya Bank (IVBL), too, is required to comply with procedures specifically applicable to designated US persons to provide these services. This vastly increases the cost of providing these services. As a result, IVBL has, based on an economic strategic and risk perspective, decided to discontinue providing securities activities to designated US persons.'' 

The bank, however, will continue to provide other services to NRIs based in the US. ‘‘Designated persons'' are generally defined as a natural person, residing in the US or any entity organised or incorporated under the laws of the US. US citizens living aboard may also be deemed US persons under certain rules. When contacted by TOI, an ING Vysya spokeswoman confirmed having discontinued securities services for designated US persons, including NRIs. ING Vysya said its focus on ‘‘NRI business has not been dominated by US customers and, hence, a very small number of customers are impacted''. 

SEC has made amendments to Investment Advisers Act of 1940 relating to custody of client assets to provide additional safeguards for investors. The amendments come after a review by SEC following the Madoff scandal and several Ponzi schemes involving misappropriation of customer assets. 

However, it's not immediately clear whether other foreign financial services companies, and as a result a large number of NRIs, would also be impacted by the SEC ruling. Several foreign financial services companies did not reply to TOI's email queries on whether the new norms would impact them or whether securities servicing costs would go up. 

However, a Franklin Templeton spokesman said: ‘‘We don't expect this development to have any impact on us as we do not distribute our India-domiciled products in the US. We have a US-domiciled Indian equity fund that US residents can access.'' 
Analysts said the SEC stipulations would increase costs. A source said: ‘‘Look, what did SOX (Sarbanes-Oxley Act of 2002 enacted as a reaction to scandals, including Enron and WorldCom) do? It made IT guys richer and banks poorer. The SEC norms will make auditors richer and banks poorer.'' Source: Economic Times

India Infoline Advises to Buy Indiabulls Real Estate for target of Rs 185

India Infoline has advised high-risk traders to buy Indiabulls Real Estate for target of Rs 185. “Indiabulls Real Estate is pointing to continued strength in the weeks to come as it has broken a downward-sloping trend line since early-January 2010. A detailed study of the daily chart shows that the stock has corrected from the high of Rs 236 in January 2010 to touch a low of Rs 151 last week.

On Thursday, the stock staged a smart breakout past the downward sloping trendline. This bullish breakout signals the end of the intermediate downtrend. We recommend high risk traders to buy the stock in the range between Rs 171-175 for a target of Rs 185 with stoploss of Rs 166,” the report said.

Sobha Developers to reduce debt via land sale

Sobha Developers Ltd plans to cut debt by the end of FY11, banking on cash inflows and monetisation of land sales, a top official said on Tuesday.

"We used to have a debt equity (ratio) of 2:1 earlier. This has been brought down to 0.85:1, going forward it will be further brought down to 0.5:1, before the end of next financial year (FY11)," Managing Director J.C. Sharma told Reuters Trading India chatroom. Sobha Developers has around 3,000 acres of land spread across 10 cities, of which Bangalore accounts for about 31 percent of the total land bank.

The company expects to monetise around 1-1.5 billion rupees from sales of land, he said, but did not provide the location of land which the company intends to sell. It had received 540 million rupees from sale of land in the quarter ended Dec. 2009.

Sobha is also confident of selling 2-million square feet of space in FY10, he said. It has sold 166 units till date out of a total 310 apartments at the recently launched Sobha Garrison, a luxury residential complex for army personnel, in Bangalore. He said there is a revival in the realty industry, even though it would take another two-three quarters for it to come back to normal situation. There could be also some price corrections by the end of the year in "some pockets", like "Mumbai market, where office space costs more than in Manhattan", Sharma added.

The company is also planing to launch about 8 million square feet of space in the next 12-15 months time across four cities, Bangalore, Pune, Coimbatore and a new location in Chennai. Sobha has currently 5.6 million square feet of contracts on hand, he said. 

(Reporting by Rajesh Kurup; Editing by Prem Udayabhanu). Source: Yahoo News

DB Realty Makes Lacklustre Debut

February 24 2010, 14:18:10 IST | PALLAVI S.

The Mumbai-based real estate developer raised over Rs 1,440 crore through the public float.

DB Realty has joined the list of firms who have failed to generate returns for IPO investors on their debut. The scrip opened at Rs 452, 3% lower than its issue price of Rs 468 (the lower end of the IPO price bracket of Rs 468-486), tanked over 10% before recouping some of its losses and is trading down 5% at the time of posting this report.

The Mumbai-based real estate developer raised over Rs 1,440 crore through the public float (managed by Enam Securities and Kotak Mahindra Capital) soon after the market went into a tailspin correcting 10% from its recent peaks.

DB Realty raised the money for construction and development of certain projects worth Rs 1,045 crore and repayment of loan from IDFC worth Rs 80 crore. The realty firm has outstanding loans of Rs 751 crore.

Investors in DB Realty-- Lehman Brothers, Trinity Capital and IL&FS who owned 5.37% each in the company pre-issue-- have cost of purchase below Rs 200. So, each of them is still sitting on unrealised gains of over 2.3x on their three-year-old investment in the company, as per VCCircle calculations.

Another entity who is making a neat pile is Walkinson Investments Limited, whose antecedents could not be ascertained. It had chipped in with Rs 525 crore through compulsorily convertible debentures in March 2009, which were converted into equity shares of the company last September. At the current price, it is estimated to be sitting on an unrealised gain of 65% on the 11-month-old investment.

Jointly promoted by Vinod Goenka and Shahid Balwa, DB Realty has 10 ongoing projects, aggregating approximately 18.61 million sq ft of saleable area. For the year ended March’09, it had total income of Rs 471 crore with net profit of Rs 145.8 crore. Source: VCCircle