After NHPC and Oil India POs, 15 real estate companies are waiting in the wings to tap the capital market to raise upto USD 6 billion with the housing sector showing signs of recovery.
“Fifteen real estate firms including Lodha Developers, Oberoi Constructions, Emmar MGF and Godrej Properties among others are planning to raise around USD six billion from the domestic market in the next six to eight months,” Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj, said here.
These are basically firms which wanted to come out with the IPO earlier, but held them back due to bearish market, he said. “However, I believe that the market has appetite for USD 1.5-2 billion during the period and thus it will be difficult for second or third-runk companies to raise funds if they do not price the IPO properly,” Puri said.
The success of a real estate IPO would depend upon corporate governance, background of the companies and the right pricing among others, he said, adding that start-ups and relatively unknown firms would face difficulty to raise funds from the market.
Puri said almost USD six billion private equity fund was also likely to come in the six to eight months time to the domestic real estate market. “Private equity funds which have raised the money from the Indian market and the management are Indian and also those which might have raised fund outside are now investing in the Indian market,” Puri said.
However, he said private equity funds raised overseas and managed by non-Indians are still not coming into the Indian real estate market.
Puri, meanwhile, cautioned that the price of the residential properties should not go up drastically as the industry was still on the thin ice. “A minor 5-10 per cent hike is fine, but anything beyond that will take away the confidence from the consumers,” Puri said.
Source: Economic Times, Chennai Edition